The cryptocurrency market tends to be much more volatile than traditional stocks. Prices can change drastically in a matter of hours, and it is difficult to predict where a coin will head next. It is therefore necessary to understand the phrases commonly used to describe significant market fluctuations. Cryptocurrency investors refer to significant market changes as “bull” and “bear.” Let’s discuss the definitions of these terms and how various market conditions impact cryptocurrency payments.
- Bear market is when the price declines steadily for a period of time. It comes with low trading volumes and low liquidity.
- Bull markets are characterized by long-term upward price trends, high trading volumes, and optimistic investor sentiment.
- With the right planning, cryptocurrency payments can be beneficial in both bull and bear markets.
Bear and bull markets – general explanation
Generally, “bull” or “bear” markets are used by traders to describe a longer period and more significant price changes in any direction.
What is a bear market?
A bear market is recognized when the asset price trends downward and continues to decline sharply for a period of time. A drop in one or more cryptocurrency prices of more than 20% is regarded as a bear market trend. Typically, cryptocurrency traders look to buy assets when the market is down, especially at its lowest point. However, the trading volumes are low in comparison to the volumes during a bull trend.
Bear markets typically last a year or longer. Historically, trend cycles could last up to 4 years. As of December 2022, we are currently in a bear market. Since reaching a high of $69,000 in November last year, the value of Bitcoin, the most widely used cryptocurrency, has dropped by 70%.
During bearish markets, investors have the opportunity to acquire cryptocurrencies at lower price points and sell them during the next bull market. This is typical for long-term investing strategies. But because risks are greater during downward trends, it’s critical to conduct in-depth research on the asset and its historical behavior.
Selling their current holdings as soon as they notice downtrends is another tactic that investors employ. As the market keeps falling, they later buy these holdings back at a much lower price.
What is a bull market?
When the market trend is steadily moving upward, it is referred to as “a bull market.” When the market is bullish, coin prices increase over an extended period of time. The beginning of the bull market is often used by investors to purchase coins and then sell them for a profit at the peak of the price. When the bull market gains strong momentum, it’s called a “bull run.”
The bull market in cryptocurrencies typically follows the cycle-prone behavior of Bitcoin. It typically lasts for a half-year to a year and occurs every four years. Following the peak, there is typically a period of steady decline and accumulation. The most recent bull run saw Bitcoin exceed a price of $60,000 between July and November of 2021.
Overall favorable market conditions boost investors’ confidence. Given that the cryptocurrency market is smaller than traditional stock markets, support from public figures, popular culture, and the crypto community can have a significant impact. Events that indicate inflation and pose a threat to fiat also increase interest in cryptocurrencies.
What is the difference between bull and bear markets?
There are some key distinctions between bull and bear markets, including:
| Bull market | Bear market | |
| Trend | Positive | Negative |
| Trading volumes | High | Low |
| Investor outlook | High confidence | Low confidence |
| Investment principle | Sell high | Buy low |
Should I accept crypto payments during bull and bear markets?
The short answer is yes. As we previously discussed, knowledgeable traders use investment strategies during both bull and bear trends. This applies to receiving crypto payments and, subsequently, holding crypto assets. The most common rule of “selling high and buying low” applies here. During bear markets, it’s common to hold onto the assets and sell them when the price is higher. During a bull market, it’s common to sell when the price reaches its peak.
Like with any other financial decision, it’s important to choose a crypto coin that is trustworthy and reputable when accepting payments. It’s also important to use a reliable crypto payment gateway in order to integrate cryptocurrency payments into your business.
Why you should accept crypto payments with NOWPayments
With the aid of NOWPayments, integrating crypto payment tools is quick and free. NOWPayments is a non-custodial cryptocurrency payment processing service that offers transparent rates and transaction fees as low as 0.5%. Additionally, when creating a payment link, the exchange rate can be frozen for 20 minutes to protect against volatility and avoid income losses.
How to accept crypto payments
Numerous tools are available for NOWPayments users, including point-of-sale (POS) terminals, subscriptions, mass payments, donations, and payment links.
Just take these quick steps to start accepting cryptocurrency payments:
- Create an account by entering your email address, verifying it, and then adding your wallet address to which your payments will be sent.
- From your account dashboard, select Payment Tools, open the Payment Link tab and then create a payment link. Click the Create payment link in the pop-up window that follows, then select the currency and payment amount.
- Both an order description and an ID are optional. Click again to confirm and copy your payment link, which you can then send to specific recipients or insert into your website.
Conclusion
Multiple factors influence both the bull and bear crypto markets. There are some differences when thinking about trading in bullish and bearish markets because, as previously discussed, the cryptocurrency market has fewer investors and is more volatile than the stock market.
One tip is to keep an eye out for past market trends, both bullish and bearish. While there are averages based on historical market trends, the crypto market is still young, and patterns are bound to change. Being aware of trends can help you anticipate future ones, or at the very least give you a plan for navigating market changes.
Remember that there are always risks involved with each strategy, whether you’re investing in a bull or a bear market. Therefore, it’s essential to conduct your own research to make sure that your choice of assets and tools is the best you can make.