Bearish: How to Identify and Survive a Market Drop

Have you ever wondered why they say “bearish” when the market crashes? The term comes from the way a bear attacks: striking downward with its claws. That’s exactly how prices behave during a bearish season, falling mercilessly as selling pressure completely overwhelms any buying attempts. When this happens, assets often lose more than 20% of their value from the peak, creating a wave of pessimism that paralyzes new investors.

The Psychological Traps of Bearish Markets

The most dangerous aspect of a bear market is not just the price decline, but the fear it generates. During a bearish phase, the market becomes extremely volatile, full of false signals that deceive you into buying when the price temporarily rises, only to fall even deeper afterward. Many beginners fall into the panic trap: selling at the bottom believing things will get worse, or buying too early when the downtrend has not yet ended. The key is to recognize these false rebounds and not be dominated by the collective fear mentality.

What Causes a Bearish Market?

The reasons behind a bearish market vary: it could be the bursting of speculative bubbles, a global economic recession, or major security incidents that shake confidence. However, what’s interesting is how different types of investors respond. Professionals see a golden opportunity: they leverage short orders to profit as prices decline, or they patiently wait to accumulate the best coins at historical prices. New investors, on the other hand, tend to abandon the game just when it’s most important to stay calm.

Take Advantage of the Bearish, Don’t Run from It

Remember that every bull market is born from extreme despair. A true investor understands that a bearish phase is only temporary, not the end of the world. Capital management is what separates winners from losers in these seasons. Do you prefer to hibernate and wait for better times, or learn to navigate turbulent waters with short orders and strategic accumulations?