When it comes to markets, both conventional and cryptocurrency, the terms “bullish” and “bearish” appear often in the headlines and in conversations, although its use usually depends on financial knowledge and experience. What do these two terms mean?
Bullish and bearish refer to market sentiment, seen collectively or expressed by an individual. If someone is bullish, it means that they expect an asset or asset class to go up in price. In contrast, bears refer to negative expectations about prices. Someone who is bullish is sometimes called “bullish” or “optimistic” if a group or faction of the market is bullish. Therefore, the “bearish” (from the English bear, or bear) or “bears” anticipate the fall in the value of assets.
Why use bulls and bears as animals of choice for this terminology? The answer is possibly in the way both animals attack their prey. The bulls attack upward, driving their horns into their target. Bears, on the other hand, start high and attack down with their weight and arms.
However, this explanation of the roots of the terminology is only one possibility, according to Investopedia. “The real origins of these expressions are not clear”. The narrative may also come from the bearskin deals of yesteryear.
The Oxford Learner’s Dictionary describes bullish What: “feel confident and positive about the future“, or”cause, or be related to, an increase in the price of the shares“. Bearish it means: “show or expect a drop in stock prices“.
Bullish and bearish desires depend on several factors. In general, traders worry little about whether a market or asset is bullish or bearish, as long as they can trade in both directions (which is called going long and short).. Traders tend to enter and exit their positions more frequently than investors, and use shorter time horizons for their strategies.
Rather than wanting the bulls to outperform the bears, or vice versa, traders may be more concerned about whether they are correct in their bullish or bearish assessment, benefiting from trading as long as they are correct in determining which direction a certain asset is going, depending on the trading strategies used. Nevertheless, some strategies, talents or trends of traders may favor one market condition over the other.
Investors, for their part, tend to buy positions and hold them for longer, benefiting from rising prices, so they could logically want bull markets. An investor can take a long-term short position or sell an asset if they have a bearish view of it, although the most anyone can make (in almost all cases) is a 100% profit if they take a short position in the absolute maximum and brings the asset to zero. On the other hand, Assets can virtually go up in price infinitely, offering potential gains of more than 100%.
As for cryptocurrencies in particular, Why would an investor or trader wish the price of Bitcoin (BTC) or any other altcoin to go down, even if they are bullish in general in the cryptocurrency sector? One reason could be your position. If a trader is bearish on BTC – waiting for an upcoming price drop – he can enter a short trade on BTC and therefore logically wants its price to decrease, as he would benefit from the asset’s fall.
Traders can even be short-term bearish and long-term bullish, or vice versa. They can, for example, expect the price of Bitcoin to fall back over a period of days or weeks, but eventually rise and return to a multi-month uptrend.
Investors or traders may also have a bearish view in the short term and a bullish view in the long term., wanting lower prices in the short term to buy certain assets at relatively cheaper prices. On the other hand, a market participant may have a short-term bullish outlook with a long-term bearish outlook. They may think that prices will go up due to promotion or other factors, so they can buy or go long in the short term, while ultimately they hope to sell their positions eventually because they believe the market is a bubble or something. the style.
It’s important pointing that, in markets, the definition of short and long term can be subjective.
A look at what can produce a bullish or bearish bias
Each person’s bullish or bearish opinion is likely based on a wide range of components, such as charts, news, and general knowledge.. A market participant may think that the price of Bitcoin or an altcoin is bearish for a period based on certain conditions or chart patterns.
Assets can also be viewed as long-term bearish after negative announcements, as a specific regulatory action of the government. A bullish view can be held for a period based on an upcoming event, such as the launch of Bitcoin futures trading by the Chicago Mercantile Exchange in 2017.
People can also have a bearish or bullish overview on an asset as a whole.. MicroStrategy CEO Michael Saylor sees Bitcoin as a new store of value option. Gold advocate Peter Schiff, on the other hand, sees Bitcoin as a bubble.
Thus, there are many factors that intervene in the different views of the bulls and bears. Timelines, prospects, opinions and events can influence a person’s perspective on an asset or asset class. Ultimately, each person must come to their own conclusion about what they think.
Don’t stop reading: