Cryptocurrencies are crashing once again, thanks to the bearish macro sentiment caused by China’s second-largest real estate firm, Evergrande. The firm is feared to be close to defaulting on its outstanding debts, which could have a domino effect across the globe – enough to cause another recession and kick start a bear market in Bitcoin sooner than anyone would have expected.
Volatility in crypto doesn’t necessarily have to be a bad thing, even if the tides turn enough to cause a bear market and put an end to the bull phase for the next several years. You also need a platform that provides the tools necessary to get the most out of a bull market the moment things turn positive again.
Difference Between Bear Market and Bull Market
We’ve talked a lot about bull and bear markets, but what exactly does this mean? To start, bulls get the reference because they aggressively gore with their horns in an upward motion, sending prices higher.
Bears tend to be more cautious and instead swat downward with their massive claws to make a less frequent but more damaging impact.
By stock market standards, a 20% decline is a bear market. But with crypto, that could happen on an ordinary Sunday afternoon, then recover by Monday morning. A bear market, as defined in crypto terms, results in a full 80% correction or more in Bitcoin, with altcoins commonly retracing as much as 90% or more.
Bull markets in crypto cause coins to raise hundreds to thousands of percentage points in a matter of months. A better way to look at bear or bull phases in crypto is by defining them as uptrends or downtrends.
A downtrend is nothing more than a series of lower lows and lower highs in succession, while an uptrend and a series up higher highs and higher lows. Often when a higher low is made, it tells traders to go long and vice versa. These signals are often more important than anything a technical indicator can provide.
With a market direction more clear, one can alter their approach and trading strategies effectively.
Bull Market Trading Strategies
Investors and traders would want to focus on going long at any pullbacks to support during a bull market. Pullbacks to the middle-Bollinger Band or around the 0.618 Fibonacci retracement level offer some of the best results during a bull market for Bitcoin.
Knowing when to take profit or hedge short during a bull market is also critical to not getting caught in a top scenario. When the RSI on monthly timeframes reaches overbought, it could be time to hedge short at the first signs of weakness. Taking profit is also recommended, or moving stops in profit. When parabolic markets end, they tend to correct violently and fast.
Bear Market Trading Strategies
During a bear phase, shorting each bounce works as effectively as buying each dip in a bull market. Hedging long at support also works well to profit from any bear market rallies, which will occur at a frequency as buyers and sellers play tug of war for months on end.
Watching for any falls to long-term moving averages, such as the 200-week MA, can help to predict market bottoms for the most long-term success and to get in on bull markets before they begin.
How to Trade in Bearish and Bullish Market?
With spot trading platforms, you can only buy and HODL. There are also very few options to protect capital, such as hedge positions, and the only way to take profit is to cash out completely. If you take profit too soon, you could miss out on the most possible gains.
But with this platform, traders get the best of both worlds. They can manage markets no matter the direction with long and short positions, stop-loss orders, and built-in technical analysis tools.
By having complete control over both directions of the market, the trend matters less, and volatility that sends most investors running for the hills can become a faucet of profits for those with the right skills, the right tools, and the right platform.
Using the included charting tools from TradingView, traders will also know when the trend is about to change and can plan how to prepare for what is to come. Never get caught off guard again and get stuck HODLing through a bear phase. Trade both directions of any market with success, all from a single account.
With the award-winning PrimeXBT trading platform and their advanced formula for success, it truly doesn’t matter if it is a bear or bull market at all. Here is why.
What is PrimeXBT?
The platform is a rare trading tool built on a traditional market foundation. Because of this, there is a client-focused approach not found anywhere else in the digital finance sector. For example, both novices and professionals will feel right at home using the tools. The entire experience is customizable and fully personalized, complete with a dedicated account manager and 24/7 live support chat available whenever you need it.
The award-winning trading platform offers an introduction to margin trading Bitcoin and other cryptocurrencies, forex currencies, stock indices, commodities, and more. The complete list includes examples such as:
Cryptocurrencies – Bitcoin, Ethereum, Litecoin, EOS, Cardano
Commodities – Brent Oil, WTI Crude Oil, & Natural Gas
Stock Indices – DAX 30, S&P 500, NASDAQ 100, Hang Seng China 50, ASX 200, Nikkei 225, FTSE 100, EUR50, CAC 40, IBEX 35, & the Dow Jones.
Forex Currencies – USD, EUR, AUD, GBP, CHF, JPY, NZD, SDG, TRY, RUB, MXN, ZAR, HKD, CNH, and THB.
Metals – XAG & XAU
With so many options available from one account, each with long and short positions available, any user can build a diverse trading portfolio not possible anywhere else, all under just one roof. Each asset tends to experience a bear phase or bull phase at different times, providing unique opportunities around every corner.