In a bear market, the value of cryptocurrencies has dropped by at least 20% and is still declining. For example, consider the well-known crypto meltdown that happened in December 2017 when investors eye-witnessed Bitcoin drop from $20,000 to $3,200 within a short period.
A decrease of 20% or more from prior highs is indicative of a declining bear market. As a result, prices are low and constantly declining. The downward pattern proceeds due to the declining trend, affecting investors’ expectations. The way bears fight, which entails rising high before hitting with their claws pointed downward and all of their bodyweight pressing downward, is supposed to have inspired the word “bear.”
In a bear market, the economy stumbles, and unemployment is high. In addition, poor economic policies, geopolitical upheavals, market bubble bursts, and even natural calamities can cause these situations.
Additionally, investors are generally less upbeat and confident during bear markets than they are during bull runs.
Out of panic, some investors liquidate their assets, furthering the downward trend. Eventually, bear markets usually settle down, and as investors gradually regain confidence, a new bull cycle begins.
