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In the last months of the year, everyone expected the downtrend to turn in favour of investors regarding cryptocurrencies. From the perspective of investments, the financial market was quite shaken; in some cases, the price of shares collapsed, much like the active crypto market, but it is also true that they have recovered.
There are many investors who, in a constant search for returns, have left the cryptocurrency market to migrate to traditional assets quickly.
All this is due to an economic and financial crisis that keeps all investors in anxiety and anguish, regardless of the type of financial assets in which they are carrying out transactions. Whether you are a seasoned trader or just starting, 1kdailyprofit can make your cryptocurrency trading much easier.
What does a bear market refer to?
Although no concept defines what a bear market represents, experience, practice, and custom are the characteristics that have made it possible to identify when an economic and financial ecosystem enters a period of sharp decline.
The term used in the stock market jargon is "Bear Market," when financial assets, traditional or digital, fall more than 20%.
Last year was so unexpected that even financial assets as high as the S&P 500 entered a bear market, a situation that had not occurred since 2020 when the COVID-19 pandemic began.
Cryptocurrencies have not escaped this stage or market phase, where the effects in many cases have been devastating, keeping in the ranking of crypto assets all those financial instruments that lead the list by market capitalization.
The most used way to identify the beginning of a bear market is through the quote or closing price; once it shows that a bearish trend is being generated, the main feeling is uncertainty.
Factors that triggered the downtrend:
The active crypto market is currently at a crossroads since the bearish race that it has developed for a relatively long period is due to a set of primarily external factors and elements that contribute to the decrease in demand for this type of digital assets.
It is essential to highlight that the bear market began at the end of 2021 when a group of government institutions began their monitoring of existing regulations and those that could be generated in the crypto assets market.
This situation undoubtedly affected the market since a hostile environment began to introduce legal instruments that could strictly control cryptocurrencies.
An event that caused a stir at the mining level was the prohibition by China to developing cryptocurrency mining activities; in this case, Bitcoin was one of the most affected, which caused many miners to emigrate to other countries.
Another factor has been the excessive inflation and the restrictive measures by the Fed regarding the increase in interest rates; this caused a counterproductive effect in the crypto market, where people prefer to sell their digital assets for their finances.
Another relevant factor for many crypto analysts has been leverage, where capital is injected into the market through loans in crypto assets in the hope that its behaviour will change. Still, the results, in this case, have been adverse.
Some signs that help visualize the rise:
Market analysis allows a concrete evaluation of the behaviour of digital assets, always revealing the possible changes that will be generated at a given moment.
Often these forecasts can be assertive, but the financial markets are usually volatile and completely change the scenario. Therefore, the pre-established strategies must be rectified and modified promptly.
In the crypto assets market, specialists usually predict the change in trend by observing the phases or cycles that the market has developed and that have been fully fulfilled; these cycles are four and are known as Accumulation, profit margin, distribution, and price decrease.
These cycles, in the case of crypto assets, are usually fulfilled in a period of 1,275 days which is equivalent to four years; according to previous events, the bear market occurs when the realized price of BTC is higher than the market price.
Conclusion:
The Bear Market that developed in 2022 should be noted that it is the first to be seen related to factors external to the market, such as inflation, geopolitical situations, and constant economic and financial measures.
