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How to Spot a Bull or Bear Market?

July 2022

There are two important terms in financial markets that can help investors understand and react to certain situations. Both bull and bear markets describe how markets are performing and can be applied to any asset, including metals, commodities, or cryptocurrencies. Understanding both can be essential for financial decisions and investment portfolios.

What is a Bullish Market?

Bull markets happen when investment prices are on the rise for a period of time. Bullish traders and investors look for growth opportunities in the financial markets driven by a thriving economy, boosting their confidence. Consequently, they are eager to take a bullish position by speculating on trades that are likely to increase in value. Taking a bullish position is described as buying or holding an asset.

The longest bull market in American history started at the end of 1982 and lasted until 2000. During this period, the Dow Jones Industrial Average (DJIA) averaged 15% in annual return. Additionally, the NASDAQ increased its value between 1995 and 2005, rising from $1,000 to over $5,000 representing a 400% increase.

What is a Bearish Market?

While bull markets are driven by optimism, bear markets are generally pessimistic regarding the state of the financial markets. Bears usually occur during economic slowdowns when traders and investors want to sell an asset to take advantage of an expected decrease in value. Bear markets can be cyclical or longer-term and can last from a few weeks to several years or decades.

In February 2020, global markets entered an unexpected bear market with the Covid-19 pandemic, where the DJIA went down 38% from its all-time high on February 12 ($29,568.77) to a low on March 23 ($18,213.65) in just over one month.

Assessing Market Changes

The key to identifying a bull or bear market is to analyze how the market is performing over the long term. Small movements can represent a short-term trend or a market correction as an automatic reaction to certain events. Unemployment rates, consumer price index (CPI), inflation, and gross domestic product (GDP) are used as indicators to assess the general state of the market.

Nevertheless, a market can sometimes go through a period of stagnation. During this period, the market will try to find direction. Therefore, not all movements in the market can be characterized as bull or bear.

The Bottom Line

It is important to understand the direction of the market to achieve sustained success. Constructing a long-term plan and diversified portfolio will manage risk and help make wise financial decisions. Join MultiBank Group and trade over 20,000+ financial instruments on 6 asset classes with the tightest spreads in the industry. Open an account in minutes and enjoy the highest levels of leverage and swap-free trading. Start with a FREE demo account. Trading foreign exchange and/or CFDs on margin carries a high level of risk.

Top Cryptocurrencies with Price Predictions

# Crypto Prediction Accuracy CVIX Price 24h 7d Market Cap 7d price change
1 Bitcoin (BTC) BTC Bitcoin predictions 72.8% 54 $57 249.71 -1.30% 5.51% $1 128 965 217 766 BTC 7 days price change
2 Ethereum (ETH) ETH Ethereum predictions 77.6% 44 $3 068.42 -1.69% 6.70% $368 858 212 080 ETH 7 days price change
3 Tether (USDT) USDT Tether predictions 94.4% 1 $0.999919 0% 0.04% $112 250 679 718 USDT 7 days price change
4 Binance Coin (BNB) BNB Binance Coin predictions 76.4% 48 $520.86 -1.33% 10.43% $76 870 025 748 BNB 7 days price change
5 Solana (SOL) SOL Solana predictions 79.2% 32 $136.30 -3.78% 8.15% $63 237 582 576 SOL 7 days price change
6 USD Coin (USDC) USDC USD Coin predictions 92% 2 $0.999857 -0.01% 0% $33 959 374 486 USDC 7 days price change
7 XRP (XRP) XRP XRP predictions 76.4% 40 $0.460826 3.61% 13.92% $25 716 573 569 XRP 7 days price change
8 Toncoin (TON) TON Toncoin predictions 84.4% 23 $7.33 2.10% 10.89% $18 363 285 446 TON 7 days price change
9 Dogecoin (DOGE) DOGE Dogecoin predictions 72.4% 53 $0.106067 -2.63% 10.23% $15 388 370 016 DOGE 7 days price change
10 Cardano (ADA) ADA Cardano predictions 82% 32 $0.397617 1.21% 20.39% $14 265 298 252 ADA 7 days price change
11 TRON (TRX) TRX TRON predictions 81.2% 33 $0.135319 0.74% 10.68% $11 791 010 351 TRX 7 days price change
12 Lido stETH (STETH) STETH Lido stETH predictions 96% 1 $2 941.39 -0.40% -3.32% $10 258 752 564 STETH 7 days price change
13 Wrapped TRON (WTRX) WTRX Wrapped TRON predictions 96% 1 $0.116354 -0.46% 0.23% $10 171 995 609 WTRX 7 days price change
14 Wrapped Bitcoin (WBTC) WBTC Wrapped Bitcoin predictions 94% 2 $65 806.83 0.78% -2.68% $10 083 957 608 WBTC 7 days price change
15 Avalanche (AVAX) AVAX Avalanche predictions 71.2% 56 $25.18 -2.54% 8.63% $9 933 020 569 AVAX 7 days price change

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