A bear market occurs when prices fall 20% or more from recent highs over a sustained period. The term applies to stocks, forex, commodities, and crypto markets.
Characteristics
- 📉 Sustained downward price trend
- 😰 Negative investor sentiment and pessimism
- 📰 Bad economic news dominates headlines
- 📊 Lower trading volumes (sometimes)
- 💰 Investors move to safe-haven assets
Bear Market vs. Correction
| Correction | Bear Market | |
|---|---|---|
| Decline | 10-20% | 20%+ |
| Duration | Weeks | Months to years |
| Recovery | Quick | Slow |
Trading in a Bear Market
- Short selling — profit from falling prices
- Put options — downside protection
- Safe havens — gold, USD, CHF often strengthen
- Hedging — protect existing long positions
Historical Examples
- 2008 Global Financial Crisis (-57% S&P 500)
- 2020 COVID Crash (-34% S&P 500)
- 2022 Crypto Winter (-75% Bitcoin)