Bear Market
A bear market is a sustained period of falling prices and weak sentiment. In stock markets it is usually defined as a decline of 20% or more from a recent high; in crypto, bear markets have often meant far deeper drops lasting a year or longer.
How a bear market is defined
The 20% rule comes from stock markets and is a convention, not an official threshold. Crypto regularly falls 20% within weeks during otherwise rising markets, so in crypto the term usually describes a longer trend of lower highs and lower lows, falling volume and fading interest.
The name is often explained by how a bear attacks: swiping its paws downwards. Its counterpart is the bull market.
What past crypto bear markets looked like
Bitcoin fell by more than 75% from its peak in both the 2018 and 2022 bear markets, and many altcoins lost 90% or more. The 2022 decline combined rising interest rates with crypto-specific failures, including the collapse of Terra in May and of FTX in November.
Bear markets also tend to expose weak business models. Projects that relied on rising prices or token rewards lost users, and some lenders and exchanges became insolvent.
An example
Say a coin peaks at 100 dollars and falls to 30 dollars over twelve months, with short rallies to 50 dollars along the way that later fade. Each rally may feel like the start of a recovery, but the pattern of lower highs continues. To return to 100 dollars, the coin would have to more than triple from its low.
Common mistakes
Buying every dip with borrowed money is a frequent way to be wiped out, because a 50% fall can be followed by another 50% fall. Holding funds on platforms that offer high yields is another risk; in 2022, several such platforms froze withdrawals.
The opposite mistake is selling everything at the point of maximum fear, known as capitulation, after holding through most of the decline. Deciding in advance how much risk you can carry, and keeping enough cash outside crypto, helps avoid both.
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Frequently asked questions
How long do crypto bear markets last?
There is no fixed length. Past crypto bear markets lasted roughly one year or longer from peak to low, but the number of cycles is small and future ones may differ.
Is a 20% drop always a bear market in crypto?
No. Drops of 20% happen often in crypto, even in rising markets. Analysts look at the longer trend, not one threshold.
What is the opposite of a bear market?
A bull market, a sustained period of rising prices and optimism.
Related terms
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