Course Content
What Is a Bear Market?
Financial markets move in trends. It’s important to understand the differences between these trends to be able to make better investment decisions. How come? Well, different market trends can lead to wildly different market conditions. If you don’t know what the underlying trend is, how are you going to adapt to changing conditions? A market trend is the overall direction that the market is going. In a bear market, prices are generally declining. Bear markets can be a challenging time to trade or invest in, especially for beginners. Most crypto traders and technical analysts agree that Bitcoin has been in a macro bull trend throughout its existence. Even so, there have been several relentless cryptocurrency bear markets. These generally bring more than an 80% decline in the price of Bitcoin, while altcoins can easily experience more than 90% declines. What can you do during these times? In this article, we’ll discuss what a bear market is, how you should prepare for it, and how you may be able to profit in it. If you’d like to read about bull markets first, check out What Is A Bull Market?.
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What is a bear market?
Bear market examples
Bear market vs. bull market – what’s the difference?
How to trade in a bear market
Closing thoughts
What Is a Bear Market?
About Lesson
As we’ve discussed, many investors think that Bitcoin has been in a macro bull trend since it started trading. Does that mean there aren’t bear markets contained in that bull run? No. After Bitcoin’s move to around $20,000 in December 2017, it’s had quite a brutal bear market.

Bitcoin price crashes after the 2017 bull market.

And before the 2018 bear market, Bitcoin experienced an 86% drop in 2014.

Bitcoin price crashes 86% from the 2013 top. 

As of July 2020, the range of the previous bear market low around $3,000 have been retested but never broken. If that low would have been breached, a stronger argument could be made that a multi-year Bitcoin bear market is still underway.

Bitcoin retesting the range of its previous bear market low.

Since that level has not been broken, the argument can be made that the crash following COVID-19 fears was merely a retest of the range. Still, there are no certainties when it comes to technical analysis, only probabilities.
Other notable bear market examples come from the stock market. The Great Depression, the 2008 Financial Crisis, or the 2020 stock market crash due to the coronavirus pandemic are all noteworthy examples. These events have all caused great damage on Wall Street and impacted stock prices across the board. Market indexes such as the Nasdaq 100, the Dow Jones Industrial Average (DJIA), or the S&P 500 index can experience significant price declines during times like these.
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