What causes a bear market?

The beginning of a bearish cryptocurrency market is indicated by crypto assets dropping 20% or more from their previous high and pricing settling at that level. Typically, such a decline is accompanied by pessimism about the short-term prospects of the market.

You may wonder what factors caused the bear market in cryptocurrency. First of all, bear markets occur frequently and are part of the economic cycle, but they indicate a future economic slump. Among the reasons for bear markets are such factors as geopolitical concerns and the bursting of market bubbles. Important to note that each bear market is unique in terms of how far the market can fall and how long it can persist.

Boom cycle

That’s why markets are today dominated by pessimism and panic, with investors preferring to withdraw funds from high-risk assets to protect their investments.

According to Glassnode, the cryptocurrency market is entering a deep phase of a bear market.

The fundamental reason is that global inflation is rising, which is forcing foreign central banks to hike interest rates.

A brief history of bear markets

For example, we can trace the cycles of the bear markets since 2018. In 2018, for example, it was discovered that some ICO operators violated the law by selling unregistered securities, which drew the attention of the SEC.

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BIT4YOU.io

BIT4YOU.io

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bit4you is an european crypto exchange platform. We are facilitating the transition between crypto currencies and traditional currencies such as euro.