Investment as an economic field is freight with concepts such as bullish and bearish markets. Defined by a continuous trend towards higher or lower prices as the case may be, both bull and bear markets offer investors plenty of opportunities to make considerable profits and investment decisions alike.
The relative importance of bull and bear markets can be distilled in consideration of their impacts on investment decisions. In this regard, a bull market, or bull run will be described as a type of market trend characterized by sustained rising prices – both prices going up at the time being and prices expected to rise in the future.
The term is widely used to describe the movement of assets. Hence, bull runs can refer to any type of traded asset that experiences an extended period of price escalations. Bonds, gold, real estate and cryptocurrencies, which has now positioned themselves as a mainstream investment sector, are included in the category of assets that adopt the terminology.
The relationship between a bull and bear is founded on the principle that the start of one indicates the end of another and vice versa. A bear market, therefore, indicates when the market faces a downward trend of at least 20% after a relative high.
As it relates to cryptocurrencies, staggering volatility was experienced in 2021. As such, a good majority of cryptocurrencies lost their value. Perceived reasons for this was placed to be that most countries passed unfavourable regulations on crypto-related activity including trading and mining.
Over time, indicators of a bullish market have not been subjected to a single metric that certifies the start and end of a bull run period. As a result, financial market analysts and experts can only label a rising market as bullish in retrospect or after it’s started.
Indicators of a bullish trend in 2022 may however take any or all of the following forms:
1. High investor confidence and positive public sentiments surrounding the markets.
Investors continue to invest with the expectation that the value of their purchase will continue to rise in the immediate future. This positive demand for bullish stocks only further increases its value, creating a feedback loop that escalates the effects of bull markets.
In recent times, investors have been driven by the excitement surrounding decentralized applications and finance (Defi), the rise of non-fungible tokens (NFTs) and the mammoth potential for blockchain-based gaming in the metaverse. This excitement infuses positive public market sentiments as it relates to transactions in cryptocurrencies.
2. Positive economic growth
Another key indicator is the health of the economy. Economic growth isn’t required for a market to be considered a bull run, however, positive economic growth and bull markets often go hand-in-hand.
That means bull markets usually see a strong gross domestic product, declines in unemployment rates and significant investments from companies in their technologies, processes and people.
3. Market index value
A market index measures the value of a portfolio of holdings with specific market characteristics. It tracks the performance of a certain group of stocks, bonds or other investments.
Where the market index value increases by 20% or more for a minimum of 2 months, a new bull market is likely to be experienced. With anything less than a 20% boost or a 2-month duration, these price spikes are more likely to be attributed to the day-to-day fluctuations of traded assets.
On the trading view, the BTCUSD index price action began in 2010. Bear market years of 2014-2015 and 2018-2019 excluded, there have been exactly 9 candles with a higher open than the previous candles– triggering the sell order.
The crypto market has been on a bull run for a considerable portion of 2021, of course, not excluding the May crash. Although it has certainly seen some dips, one can be fairly assured that this bull isn’t going to hit a fence soon. The bull run has exceeded all its expectations and grabbed many eyeballs when Bitcoin passed the $50,000 mark for the first time. The chances and possibilities of another bull-run have been entrenched on mass adoption as recently seen in El-Salvador, pent-up demand owing to high unemployability, bans and crackdowns, as seen in China’s recent crackdown on Bitcoin mining which proved to be a punch to the crypto market and lastly, scarcity driven by Bitcoin halving.
A major part of the benefits that accrued to the Afridex model by the crypto bull-run and massive hype in 2021 is the recently launched Afridex Exchange, a tokenized platform for products businesses and start-ups. The favourable market condition in 2021 influenced a successful raise of about $63,000 to launch the Afridex Exchange that currently trades USDT, BNB, ETH and Bitcoin seamlessly. The Exchange model defies exorbitant listing prices by supporting the listing and tokenization of blockchain startups in Africa and beyond has been placed as the model’s market differentiating feature.
Charting the course of finance in Africa by serving as an incentive to blockchain startups, Afridex Exchange as a virtual consortium for blockchain products have emerged to ignite a new beginning in the journey to an improved financial future.
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