Bitcoin
Market correction vs. bear market: Key differences explained
Market corrections and bear markets both involve price declines, but knowing how to differentiate between the two is crucial in protecting your investment portfolio.
A bear market is a prolonged period of falling prices, usually accompanied by widespread pessimism.
In other words, it’s much like a market correction, but one that lasts for an extended period. For a market to be considered a bear market, prices must fall by 20% or more from recent highs. Just like market corrections, this figure is not set in stone and can vary, depending on market conditions.
As opposed to market corrections that happen during times of economic growth, bear markets usually occur when there is an economic recession or a stock market crash. A bear market in crypto can be caused by any of the same factors that trigger a market correction. However, they can also be caused by other factors, such as political turmoil or a natural disaster.
How long can a bear market last?
The duration of a bear market can vary greatly. Some bear markets last only a few months, while others can go on for years.
There have been 14 bear markets in the US from 1947 to 2022. Generally, the average length of a bear market can range from one month to 1.7 years, according to Investopedia.
Globally, bear markets tend to last for an average of ten months, give or take. However, there have been a few instances where bear markets have lasted much longer. For example, the “Crypto Winter” crash of 2013 to 2015 lasted 415 days or a little over a year.
