The Scariest Word In Investment

The way the market is going down, it is clearly visible and it has sent a lot of people panicking. This is my first article on the site and am about to share all that I know about the troubling times of the market, I hope this article serve the purpose it was meant for, which was to educate and enlighten beginners like me.

The scariest words an investor will want to hear is the "Bear Market" but in reality these words are inevitable, same as breathing is. Though it is seen as a sad moment in cryptocurrency but serious investors also gain from it. Which could include the purchase of coins at lower prices and also gives room for hauling of portfolios. Let's assume have been having interest of buying more Bitcoin cash, during the bear market when prices are down, I could go ahead and get as many as I want, this is one of the numerous advantages of the bear market.

What the is the Bear Market ?

It is a period where there is a 20% or more drop in the prices of an investment. It is not just a term used in the crypto world alone, it is applicable in Stocks, real estates or any other financial investment. This period is characterized by more selling than buying of cryptocurrency.

In cryptocurrency it is seen as a period of the "Crying Winter" as portfolios experience a downward growth .

A market for pessimistic traders, who believe prices will continually decline, making it difficult for inexperienced traders.

Investing in such period isn't a battle for the faint in heart, as crypto world is volatile and detection of which coin will survive the great winter is difficult. More people sell than buy.

A friend shared his experience of losing a handful of coin from a $1,000 worth of investment to $300, and he was still bent on not selling his coins, such investors are needed in this trying time. I said to myself the other day, early investors made a wrong choice, naming it a bear market, I would rather had prefer "an onion market" since it's bringing more tears than we expected. Just like the biblical saying, sad times don't last forever, even in the market, pessimistic periods pave way for the optimistic one, it's the bull market.

Pull Back Vs Market Correction

Newbies get confused when they hear people use this terms interchangeably. It is just a transitional step from one to another, we should know the market can't just fall from point D to point A. It has to touch certain points. It is this various points, that am going to explain .

Pull Back : It is a period, where there is a 5% drop in price and it is usually for a short period of time.

Market Correction: A period where there is a 10% drop in price of an investment, it announces the arrival of the bear market.

Causes Of The Bear Market

A lot of things or events leads to the advent of the bear market, and they are as follows ;

1) Fear : It is the major cause of a decline in price, occuring when investors develop cold feet for the unknown, it could be as a result of a legislative order, pandemic or war, and so decides to sell of their asset.

2) Bans of Crypto Activities In some Countries :

An avid example was when the Chinese Government placed a ban on crypto mining, it caused a lot of chaos and so many activities in the crypto world came to a stop and availability of crypto was minimal. This shows when there is reduction in the availability of crypto, they is bound to be a decline in supply, so a downward growth is expected.

3) Negative Comments Toward a coin: Making derogatory comment could have a negative influence on the trust users had on such a coin, making them sell of their coins and that could have lead to the decline in price of the coin, since everyone wants to sell of their coin. This could lead to a decline in the price of the coin. If the coin is a major coin in the cryptocurrency ecosystem, such activity tends to affect other coins.

Disclaimer : this is not a financial tool, but meant for educational purpose.

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