A bear market is when prices drop by 20% or more and stay down for a while. It usually comes hand in hand with gloomy investor sentiment, heavy selling, and an economy that’s showing cracks.
Bear markets often show up alongside recessions, though not always. What they do consistently represent is the opposite of a bull market. Instead of optimism and rising prices, you get fear, selling pressure, and an overall downward trend.
Why the name “bear”?
The exact origin isn’t clear, but there are two popular explanations:
- It may come from an old saying: “Don’t sell a bear’s skin before you’ve caught the bear.” This referred to traders selling assets they didn’t yet own, similar to modern-day short selling.
- Others believe it comes from the way a bear attacks, swiping its paws downward, just like prices move during a market fall.
Famous bear markets in history
- The great depression (1929): The Wall Street crash set off one of the worst economic downturns in history. Stocks collapsed, global trade slowed, and recovery took nearly a decade. Overconfidence and wild speculation during the “Roaring Twenties” made the fall even harsher.
- The dot-com bust (2000–2002): The internet boom pushed tech stocks into the stratosphere, only for them to come crashing down when many of those companies turned out to have little more than hype. The S&P 500 lost nearly half its value.
- The global financial crisis (2007–2009): Risky lending and a bursting housing bubble triggered the biggest downturn since the Depression. When Lehman Brothers collapsed in 2008, markets worldwide went into freefall. The S&P 500 lost about 50% before bottoming out.
Bear Markets in Crypto
The cryptocurrency market is also no stranger to long downturns. For example, Bitcoin’s 2018 bear market saw prices plunge by more than 80% from their peak. Similar drops followed in 2022, as global inflation and risk-off sentiment hit digital assets hard.
These cycles test investor patience but often set the stage for future recoveries, especially after Bitcoin halving events, which historically precede new bull runs.
