Bear cycles are an indispensable part of the trade and market cycle.
The market cycle is generally measured from trough to peak and vice-versa.
When the market index closing price falls 20% from its recent high, it is officially the start of a bearish phase.
In the same way, when the price index rises 20% or more from its lowest closing point, we can call it the beginning of the bullish phase.
“Beyond the point of a market consolidation (a downslide between 10-19% on average), the onset of the bear cycle tests the intrinsic value of a product or business. And that’s fair,” says Oliver Bell.
A bear market is a perfect time to assess the sinew of the business fundamentals. It shows which practices will run a long race and which ones will wear out. Just like a diamond forms after the duress of high temperature and pressure, the same rule applies in the market cycle. Oliver Bell asserts, “The pressure and the pull of the bear cycle test the real stamina of products and businesses. The bear market is the time to build on your team and sail through the rough wind with greater vigor.” Only the businesses and products which continue to add value and stay relevant to the target audience can stay afloat despite the market condition. As studies show, the bear market runs on an average for nine months, whereas a bull market runs longer – 2.5 years or more. The downturn is only temporary, so to say.
The best way to weather a downturn is to stay invested for the long run. “Calling every start-up or project a scam, just because the market is not in an upswing mode, is not right. Remember, the great businesses are made in tough times,” says Oliver Bell. One must ask. Is the model sustainable? Is the team strong in operation efficiency and customer retention? If the answer is yes, then you have a genuine product. Buy at the dip, stay invested, and you stand a chance to benefit from the bear market.
Oliver Bell is the founder & CEO of XCAD Network, a tokenization platform that facilitates additional monetization to YouTubers. He is also an advisor to the next-generation music NFT platform, Opulous. He has vast experience in building DeFi products.
Peaks and troughs are great to study the performance mettle of a product. The bear cycle is not inherently bad. It will do good to remember that after every downturn, there is an upturn.