A bear market is a sustained period where cryptocurrency prices are falling, typically defined as a decline of 20% or more from recent highs. Bear markets are accompanied by widespread pessimism and negative investor sentiment.
Characteristics
Bear markets in crypto are often marked by declining trading volumes, reduced media attention, fewer new project launches, and a general feeling of uncertainty. They can last anywhere from weeks to years.
Causes
Bear markets can be triggered by regulatory crackdowns, macroeconomic conditions, major project failures or hacks, overleveraged positions being liquidated, or simply the natural end of a speculative cycle.
Strategy
Many experienced investors view bear markets as opportunities to accumulate quality assets at discounted prices. The phrase "be fearful when others are greedy, and greedy when others are fearful" is often cited during these periods. Dollar-cost averaging (DCA) is a popular strategy during bear markets.