Bessa: What you really need to know about the market bear

In short

A bear market is a prolonged period of declining prices in financial markets, usually lasting from several months to years. It is characterized by a loss of investor confidence and economic regression, although historically it has been confirmed that even the largest declines ( such as 80-90% in crypto ) end with a rebound. Investors cope with bear markets by dollar-cost averaging, reducing risk, shorting, or simply waiting – it all depends on the risk profile and time horizon.

What is a bear market and why are we afraid of it?

A bear market can be defined as a significant, prolonged decline in the value of assets in the market. Unlike a short-term price pullback, a bear market reflects deep economic problems – recession, rising unemployment, falling corporate profits. Bitcoin has experienced many such periods over its 15-year history, some resulting in a decline of over 20% of its total value, others hitting losses exceeding 84%.

Among traders, there is an old saying: “You go up the stairs, but you come down in the elevator.” The rises are slow and methodical, while the falls are rapid and merciless. When the price starts to drop, defeatism spreads quickly. Traders sell in panic to minimize losses or lock in profits. This triggers a domino effect – more sellers enter the market, and the decline deepens, especially if there are speculators with high leverage in the market. Mass liquidations of positions occur, exacerbating the market capitulation.

What triggers a bear market?

The history of markets shows several recurring causes:

Economic slowdowns and recessions – When GDP growth declines, companies earn less, investors lose their appetite for risk and sell stocks and digital assets.

Geopolitical crises – Wars, trade disputes, and political tensions direct capital towards safer portfolios (cash, bonds, stablecoins).

Speculative Bubbles – When asset prices deviate from reality ( like the internet boom in 2000 ), a crash is inevitable. The history of crypto has many such examples.

Monetary policy changes – Raising interest rates, as in 2022, irritates the markets: loans become more expensive, investments become less attractive.

Unpredictable shocks – The COVID-19 pandemic in 2020 threw markets into turmoil due to fear and total uncertainty.

Bessa vs. hossa: What is the difference?

In bull markets, prices rise, while in bear markets, they fall. But there is something more: a bear market is characterized by long periods of consolidation, when the price hovers within a range without a clear direction. Volatility increases, trading activity weakens. In a bear market, people simply wait instead of investing. Naturally – falling prices do not entice most players.

Bear Market Years: What Has the History of Bitcoin Taught Us?

Bitcoin, which has been in a bullish macro trend from the beginning, is nonetheless experiencing brutal declines.

2018-2019: After reaching nearly 20 thousand USD in December 2017, bitcoin dropped by over 84%. This nightmare lasted a long time.

First half of 2020: The pandemic caused a sharp drop below 5 thousand USD (close to 70% within a few weeks).

2021-2022: After an impressive rise to a historical maximum of nearly $69,000, the bear market of 2022 brought losses of around 77%, reducing the value below $16,000.

However, after every bear market comes a rebound. Investors who waited came out in the green.

Market Psychology: Why is a Bear Market So Difficult?

A bear market is not just a matter of numbers – it's a psychological battle. Fear takes over the markets and sometimes turns into panic. Experienced traders know that emotions are public enemy number one. During a bear market:

• Beginner investors sell close to the bottom ( exactly when they should be buying )
• Media workers are spreading apocalyptic forecasts
• Nevertheless, traditional assets (S&P 500) and bitcoin have shown the ability to recover after each bear market.

Five ways to survive a bear market

Every investor must choose a strategy tailored to their risk profile.

1. Reduction of exposure

The simplest solution: convert part of your wallet to cash, stablecoins, or bonds. If you are distressed by falling prices, it means you have risked too much. Reduce your position to a level where you can endure it mentally and financially.

2. Impassive waiting (HODLowanie)

History teaches that markets with an established reputation ( such as the S&P 500 or bitcoin ) have always managed to recover from bear markets. If you plan to invest for years or decades, a bear market is just a temporary phase. Don't look at the quotes every day – have patience.

3. Dollar Averaging (DCA)

Many people see a bear market as a golden opportunity for DCA – regular investing regardless of the price. When bitcoin costs 100k USD and drops to 80k, you buy more. The average cost decreases. This long-term strategy reduces the risk of impulse and emotions.

4. Shorting and hedging

Experienced traders profit from declines by shorting – they sell assets borrowed, hoping for a drop, and buy back cheaper. One can also hedge their own assets by opening a short position parallel to the coins held – if the price falls, the loss on the spot will be compensated by the gain from the short.

5. Catching Rebounds (countertrend trading)

High-risk tactic for experienced traders: you enter a long position during a local bear market bounce known as a dead cat bounce. Volatility at this moment is enormous. The problem: if you don't exit on time, the market returns to decline and you can get stuck for the entire bear market. Even top traders lose here.

Where does the term “bear market” come from?

The term “bear” is metaphorical – the animal swipes its paws downward, symbolizing a decline in prices. “Bull” symbolizes the upward movement of horns. These expressions have been in use since at least the 19th century. One theory suggests that “bear” refers to traders who sold furs before they acquired them, similar to today's short selling.

Summary: A Bear Market is Normal

Bear markets are caused by economic, political, and speculative factors. They are uncomfortable, but natural. History shows that major markets and bitcoin have always recovered losses.

If you are disciplined, you can not only survive a bear market – you can profit from it. Some wait in HODL, while others reduce risk by switching to bonds and cash. DCA is a popular route for those with patience. Shorting and counter-trend trading are games for professionals.

The key is: plan your strategy before the bear market, not during it. Emotions during price drops are natural, but decisions made in panic later turn into regret.