Bear Market Rallies are everyday events in bear markets. In the bear market of 2018, the price of bitcoin marked at least ten deceptive rallies.
Many users acquire BTC with the sole intention of generating quick incomes that might become profits. Still, when users have this expectation set on a sustained uptrend, the market crumbles down and absorbs everything with it, reaching prices even lower than they had been trading in previous weeks.
The term Bear Market Rally is a usual behavior among stock markets when they go through a depreciation stage, such as Bitcoin and the market are currently going through.
This phenomenon had happened in the bitcoin community since the last long winter that digital assets faced in 2018 when in the middle of the bear market, bitcoin reported at least ten bullish rallies of this type or more.
In these price movements, the cryptocurrency experienced a recovery of up to 98% of the value it had had months before the market crumbled down. However, the growth did not last, and this rally brought a correction that took it back to declining prices.
Bear Market Rallies are wild rebounds in a currency’s cost, which can mark double-digit growth. However, since it is a fluctuation that happens during a bear market, they usually do not extend their duration more than a few days or even months.
Due to this behavior, they could get described trap, where the potential that traders see for the price to continue rising, while the price crashes sooner or later.
These rallies represent a threat to users who have little time in the market. This situation also affects those who show too much optimism, mainly because the value of an asset starts reaching higher peaks in the middle of the bear season. Hence, newbies defend that the worst is over and that from now on, it will begin a new fluctuation that could lead to a new high peak.
This situation, in general, affects small investors. When the market lives in Bear Market Rally, the most expert traders and institutional investors take control over this moment to gather enough income.
On the other hand, the new traders or newbies who acquire these items face losses. When the downtrend starts again, prices reach lower peaks than before the rally because the drop causes too much fear among investors who just entered.
By: Jenson Nuñez
