Crypto bear markets typically occur when prices of a digital asset fall below its key support range. This can be determined by analyzing technical indicators, such as the RSI (relative strength index), and price action data. Additionally, there may be indications that institutional investors are considering selling their holdings in the asset.
The bearish market is characterized by a fall in commodity price, however, not all fall is regarded as a beginning of a bearish trend, some are mere retracements from a recent high in a bullish trend. As a trader, what do you look out for?
- A fall of about 20%: On average, a fall in the price of any crypto commodity by 20% is a sign indicating the likely beginning of a bearish trend. At this point, as a trader, you’ve to be very careful and pay attention to the market movements.
- Death Cross: This is a technical indicator trader use to determine the beginning of a bearish market. How does this work? It is a chart pattern that occurs when the short-term moving average of a crypto asset drops below a long-term moving average. A death cross is not a call for panic, it’s just a signal that suggests there’s a potential that the market might go into a bearish state.
- Trading volume: Traders must pay attention to the trading volume of any crypto asset as this metric gives insight on how much of a crypto asset has been traded over a certain period. Trading volumes can tell if there is a potential reversal around and also says a lot about a particular trend. Low volume suggests traders are losing interest in a particular cryptocurrency. In an uptrend, when the volume starts to reduce, it indicates traders are losing interest, and the uptrend will most likely reverse to a downtrend.
These indicators suggest that the market is experiencing a downturn and may need time to recover. If you see any of these signs in your own portfolio, it’s recommended that you take measures to hedge against potential market declines. How do you go about that? A digital asset management service is a great place to begin. Though many of these services often allow clients to move into advanced investments like ICOs, yield farming, and crypto hedge funds, they also provide a lot of common investment alternatives. Reliq Holdings might be a worthwhile pick.
The crypto space is very volatile, so be sure to do your homework and be ready for any market changes before you set out to trade the market yourself. Crypto bear markets are characterized by low prices, limited liquidity, and a high degree of volatility. This volatility can lead to investors losing money in short periods of time.
