The market is always changing, from one form to another or has constant fluctuations. As a trader making money from the market, you also know that cycles include: accumulation phase, growth phase, distribution phase, and decline phase.
Bearish term denotes a market downtrend that investors must pay close attention to. As they can help make the best decisions for traders to enter or exit trades.
So what is Bearish? Follow the article below for answers and how to take advantage of this market!
I. What is Bearish?
Bearish is a term used to refer to the trend of the price falling below the historical average price of the market or a certain coin/token over a certain period of time.
The market uses the image of a “bear” to illustrate a downtrend because when attacking an enemy or prey, bears often attack by using their arms and legs to strike down. Therefore, a “bear” or a “bear” market is used to indicate a downward price trend.
II. Bearish telltale features
Technically, investors can recognize the Bearish market by the price behavior on the chart:
- The following price continuously makes new lows lower than the previous price
- Consecutive declines, alternating with upward corrections with slight upward force, do not break the structure of the downtrend.
- The price drops with strong force and the decrease level are higher than the increase level of the previous upward corrections
In addition to showing characteristics through price behavior on the chart, a bearish market is also expressed through other fundamental factors such as supply-demand relationship, investor sentiment and changes in variables. economic number:
- In a bearish market, the demand to sell is higher than the demand to buy => supply is greater than demand => price decreases. For investors, bearish shows pessimism about the growth of a certain coin/token, which makes them unwilling to enter the market or sell to preserve capital and limit losses. . On the contrary, with traders, they can take advantage of the price drops to profit for themselves.
- Market-wide bearish often occurs with negative news.
- The frequency of media coverage will be higher.
III. What is Bearish Market?
To put it simply, a bearish market is a market where the bears completely overwhelm the bulls, causing the market to drop 20% or more for a long time.
Bearish in the short term
Bearish in the short term can be understood as the price drops taking place in a fairly short period of time, ranging from a few minutes, a few hours or a few days. It can also be a bearish break in a long-term overall uptrend or a downside correction in a bullish market.
Investors often predict a short-term bearish market through the results of technical analysis on price charts or an economic event that tends to negatively impact prices in a short period of time.
Bearish in the long term
Bearish in the long term is the overall trend of the market when prices are down for a very long period of time, be it weeks, months or even years. During the same period, prices can fluctuate wildly, but in general, the trend is still down.
For investors, the long-term bearish market shows extremely pessimistic sentiment, they no longer believe in the potential of that coin/token or project in the future. For traders, negative price movements can cause them to quickly cut their losses. Pessimism or belief in a bearish market will make the demand for investors to sell higher than buy, which will make the price go lower.
IV. What strategy for Bearish Market
The psychology of investors is worried and scared, but you are a trader, even when the market goes up or down, you still have the opportunity to make high profits. What to do in a bearish market?
Build a highly liquid portfolio
If you are looking to invest in the market but unfortunately, the time you enter the market is when the market is falling. So which product should you invest in right now? The answer is to invest in highly liquid portfolios.
The reason is simply because at this time, most of the market’s psychology is extremely cautious, legitimate money is not poured in, you invest most of the time in highly secured assets, it will be safer. With less liquid assets that are often more risky, you should spend a smaller part of your money on them.
Of course, a risky investment can also provide a higher chance when the market is bullish again you can achieve higher returns on assets with little volatility.
Diversify your investment portfolio
Whether the market is going down or the market is going up, each asset class has different levels of volatility.
For example, on March 14, 2020, BTC dropped from around the 10,000 USD / 1 BTC mark to the 3,500 USD / 1 BTC area, almost all altcoins were “shocked” by the price, the fellow divided 2.3 even /10. But the FTT coin – the token of the FTX exchange has a negligible decrease.
The discount level of each group of coins/tokens has a different discount, in the same coin/token group also decreases at a different rate.
The diversification of the investment portfolio helps you to choose the most potential coins/tokens in each coin group. From there, there is a suitable trading strategy.
Buy some Potential Coins & Tokens
Some potential coins/tokens are in your portfolio. However, if they go too far from the good buy zone, bearish is your chance to buy them at a cheaper price. Even a lot of investors wish the bear market was a bit deeper so that they could buy as many coins as they wanted.
Of course, this needs to be carefully studied, because not all coins / tokens will increase in price after the market stops falling.
As a trader, whether the market goes up or down, you can make a profit. Short selling is the way to make huge profits while most holders are lying still or waiting for the buying price range for DCA to add their assets. Traders are not afraid of the market going down because they are more afraid of the market in the accumulation – distribution phase because in this period of decline, the price range is also extremely large. In addition to BTC, many Atlcoins have strong declines with high leverage, from which profits are many times more than waiting for the bull market.
The market always follows its rules and all cycles are played, the goal of each of you entering the market is almost always to make a profit. Therefore, it is essential to understand the strategies in the trading process in each different market type.
So, you already understand what the Bearish market is. Wish you can make a profit no matter what stage the market is in.
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