When we talk about markets, both the dominant currencies, cryptocurrencies, bullish and bearish currencies are often mentioned in headlines and conversations, although this usage is usually based on knowledge and financial experience. What do these two terms mean?
Bullish and bearish sentiments indicate market sentiment when viewed collectively or expressed by one person. If a person is optimistic, this means that he expects an increase in the value of an asset or an asset class. Conversely, bearish sentiment indicates negative price expectations. A person who remains bullish is sometimes called a “bull” or a “bull” if a group or faction in the market is bullish. Therefore, the ‘bear’ expects a decline in asset values.
Why do we use bulls and bears as the preferred animal for this term? The answer may lie in how the two animals attack their prey. The oxen attack up and push the target with their horns up. On the other hand, bears start high and attack downwards with their weight and arms.
However, according to Investopedia, such an explanation of the origins of the terms is only one of the possibilities. “The actual origin of these terms is unclear.” This word may have also appeared a very long time ago during negotiations over “bear skins”.
The Oxford Lerner Dictionary describes bullish sentiment as “feeling confident and optimistic about the future” or “excited or linked to a rise in stock prices.” Falling means: “showing or anticipating a decline in stock prices”.
Want to be bearish?
Upward and downward desires depend on a number of factors. In general, traders may not be interested in whether the market or asset is bullish or bearish if they can trade in both directions (so-called long and short positions). Often more traders enter and exit positions than investors, using shorter time horizons for their actions.
Instead of wanting to go up rather than downward, or vice versa, traders can be more concerned with whether they are correct in their bullish or bearish rankings and the profits from trades if they identify exactly the direction that an asset is heading in. Depending on the trading strategies used. However, the strategies, talents, or tendencies of some traders may prioritize one market situation over another.
On the other hand, investors tend to buy and hold positions for longer periods of time to take advantage of higher prices, so they logically want bull markets. An investor can take a short-term position or sell an asset if he takes a bearish view of the asset, although the maximum that anyone can profit (in almost all cases) is a 100% return if he reaches the absolute peak in the short-term position And the origin to zero. On the other hand, asset value can grow almost indefinitely, providing a potential return in excess of 100%.
When you specifically name a cryptocurrency, why would an investor or trader want the value of a Bitcoin (BTC) or a particular alternative currency to depreciate, even if it is generally optimistic in the crypto industry? One of the reasons may be their position. If a trader is heading lower on BTC – and anticipating an imminent fall in price – he may sell bitcoin and thus logically want the price to drop while they benefit from the fall in the original.
Traders could be bearish in the short term and long term bullish, or vice versa. For example, they might expect bitcoin to track price gains over a period of several days or weeks, but eventually rise and return to a multi-month bullish trend.
Investors or traders can also have a short-term bearish outlook and long-term bullish outlook who wish to lower prices in the short term in order to purchase certain assets at relatively lower prices. On the contrary, a market participant may have short-term bullish views of long-term bearish views. They may think that prices will go up due to noise or other factors, so they may buy or sell in the short term, and eventually expect to sell their positions because they think the market is a bubble or something like that.
It is important to note that in markets, the definition of short term and long term can be subjective.