A bear is someone who has a negative outlook on a financial market, expecting that prices are about to drop. Their perspective on a market is called a “bearish” outlook. The counterpart to a bear is a bull, someone who feels that prices will increase.
Bearish market vs Price Correction
A bearish market is not to be confused with a price correction. Although they both constitute a decline in the prices of assets, they differ majorly in their length of occurrence and the information they convey.
A price correction is a pullback in the dominant trend of a market, usually between 10 – 20% from the most recent peak price of an asset and are typically considered favourable entry positions.
On the other hand, a bearish market occurs over a lengthy period, and only traders who champion the “buy the dip” ideology see opportunities for investments during a bearish run.
The danger, however, is that a price correction can quickly become a bearish market where the price decline is sustained for an extended period, and there is no way to confidently identify a correction until they are fully executed.