How to Trade Cryptocurrency in the Bull and Bear Market

It is customary to use the terms “bullish” and “bearish” to characterise stock market fluctuations (up or down). Here, a rising market is referred to as a bull market and a declining market as a bear market.

These terminologies are used to describe long-term moves, usually up or down. Because cryptocurrency markets are typically volatile and vary regularly. Similar to this, significant movements (at least 20% in each direction) point to market developments.

Any financial market, including the cryptocurrency market, will inevitably have bull and bear markets. Investors enjoy seeing price increases, but anyone who stays in the market for a while will undoubtedly also suffer price declines.

If an investor is not prepared, the size and length of drops might vary greatly, which can be quite worrisome. It’s crucial to consider how to handle volatility while investing in cryptocurrencies, just like dealing with bull and bear markets in stock investing. You are more inclined to make rash, emotionally-driven decisions without a plan, which could negatively affect your portfolio.


What are Bull and Bear Markets in Cryptocurrency?

A period of sustained price growth in the cryptocurrency market is known as a bull market. Bull markets in cryptocurrencies typically endure for several years. Even while there are dropouts throughout these phases, they are typically less severe than a full-blown bear market, and many investors view this as a long-term purchasing opportunity.

Since it surpassed $1 in 2011, Bitcoin, the oldest and most valuable cryptocurrency (by market valuation), has had four bull markets. Finally, from the coin’s COVID-crash low in early 2020 to its all-time high in late 2021, it increased by nearly 1,100%.

On the other hand, a bear market occurs when cryptocurrency prices decrease gradually after hitting record highs. In contrast to smaller “falls,” bear markets can cause cryptocurrency prices to drop by 50% to 90% from their highs.

In fact, Bitcoin has fallen more than 50% seven times since 2012, with the biggest decline coming to over 87%. The average market-weighted decrease or decline in Bitcoin’s history has been over 60%, and as of early June 2022, the coin has dropped more than 50% significantly from its most recent peak of around $67,000.

Because it fills investors’ minds with heaviness, sorrow, and gloom, a cryptocurrency bear market is frequently referred to as a “cryptocurrency winter.”


concept of rise and fall in crypto price
concept of rise and fall in crypto price


Understanding the Psychology of the Crypto Market in Bull and Bear Market

Investor success can be significantly influenced by psychology. Knowing that each stage of the market cycle correlates to a normal mental state might help you steer clear of forming judgments based just on feelings.

For instance, there is exhilaration when the market is at or very close to an all-time high. Investors could make judgments they subsequently regret as a result of false complacency (such as buying more crypto during market peaks). On the other hand, during a bear market’s bottom, investors could feel untrustworthy, distressed, and certain that the market will never recover.

When you are overcome by powerful emotions, it is quite difficult to make strategic investments and trading judgments. So, consider making plans for many market scenarios. Here are some suggestions on how to trade cryptocurrency in the bull and bear market for both long-term investors and short-term traders.


4 Tips on How to Trade Cryptocurrency in the Bull and Bear Market For Long-Term Investors

1. Set Your Asset Allocation

Stocks and bonds are just some of the assets that can be allocated strategically, which is how you divide up a portfolio among various assets. This refers to choosing how much of the portfolio to allocate to a specific coin or coin type while investing in cryptocurrencies. Let’s say you hold 20% of the top altcoins (coins other than Bitcoin and Ethereum), a good way to not put all your money on one coin. It’s simply crypto portfolio diversification.


2. Only Buy Quality

While it could be alluring to purchase brand-new, unproven cryptocurrencies in an effort to be “first in line” or profit quickly during a bull market, long-term investors would be advised to stay with investments they feel confident with. A bear market is currently at its lowest point. Consider whether he will retain this cryptocurrency through an 80% drawdown before pressing the buy button.


3. Buy The Dip

Although the tremendous volatility of the cryptocurrency market can be concerning at times, it also gives long-term investors plenty of opportunities to purchase cryptocurrency at a “discount” during downturns, corrections, and collapses. While buying cryptocurrencies during market downturns may only sometimes be advantageous for short-term traders, doing so may be advantageous for those with a long-term perspective.


4. Rebalance Regularly

Some investors attempt to predict the market’s ups and downs, but they need help to do it regularly or reliably. Therefore, he uses periodic portfolio rebalancing, say once every 12 to 18 months, as one of his methods for incorporating profit accrual. Rebalancing entails buying the losers and selling the winners to return the portfolio’s asset allocation to a strategic level.


4 Tips on How to Trade Cryptocurrency in the Bull and Bear Market For Short Term Investors


1. Know Your Targets

Not understanding exactly at what price you want to purchase or sell cryptocurrency is one of the most frequent trading errors. “I Wing It” is a surefire prescription for failure. You run the risk of making poor choices due to market noise if you don’t have a precise buy and sell price in mind.


2. Use Stop Loss Order

You can set up an order on your trading platform to automatically sell your cryptocurrency when the price falls below a specific threshold in order to reduce your losses. When ETH drops below $1,700, you want to sell the position you bought at $1,815 in the first place. On your trading platform, you can set up a “stop loss” order that will cause your ETH to be automatically sold if its price falls below $1,700. Check out this post to discover some tools that can up your crypto game.


3. Book Profits Regularly

Short-term traders must consistently turn a profit since they want to enter and exit trades rapidly. In a bull market, traders could give in to the prevailing enthusiasm and decide to keep their cryptocurrency holdings longer than they had intended. This is extremely risky because the market could suddenly decline and eliminate your anticipated earnings.


4. Don’t Trade on Leverage

Some investors take out loans to purchase cryptocurrency through “futures contracts”. These financial tools allow traders to “leverage” their funds, enabling them to purchase more cryptocurrency than they could have done with just cash. Although not all cryptocurrency platforms do, some can enable up to 20 times the amount of money. You could acquire bitcoins worth $20,000 from traders with $1,000 in their accounts on certain platforms. Leveraged trading carries the risk that if your investment loses value, you will actually lose more money than you have.



Cryptocurrency investments can be rewarding, but the market is still very volatile, and the technology is continuously developing. Before trading or investing in digital coins, consider your investment plans, risk tolerance, and long-term objectives. Before clicking to buy, always conduct your own research. And thoroughly read the service provider’s terms of service and risk disclosures. Learn more about the risks of cryptocurrency here.

About the author

Obinna Umeh

I just love writing!