Definition
A bull market is a prolonged period of rising prices, and a bear market is a prolonged period of falling prices. The terms describe the broad direction of a market, an asset class or a single asset over months rather than days.
How it works
There is no official rule for either term. A widely used stock-market convention calls a fall of 20% or more from a recent high a bear market, and a rise of 20% or more from a low the start of a bull market. Falls of 10% to 20% are often called corrections. These thresholds are conventions used by analysts and the media, not definitions set by an exchange or a regulator.
Crypto uses the terms more loosely, partly because 20% moves are common there even inside a longer trend. People often describe crypto bull and bear markets by the overall direction over many months, by whether the price is above or below a long-term moving average, or by how far the price is from its previous all-time high.
The length and depth of past bull and bear markets vary widely, so there is no typical duration to rely on. A phase is usually confirmed only in hindsight, once the high or low is known. Short rallies inside a bear market and sharp dips inside a bull market are common, so one strong week or one bad week does not change the label.
Example (hypothetical numbers)
Suppose Index X rises from 4,000 points to a high of 5,000 points over 18 months.
The rise is (5,000 − 4,000) ÷ 4,000 = 25%, a prolonged gain usually described as a bull market.
The index then falls to 3,900: (3,900 − 5,000) ÷ 5,000 = −22%, past the common 20% threshold for a bear market.
If it then rebounds to 4,500, it is still (4,500 − 5,000) ÷ 5,000 = −10% below the high.
The labels describe moves that have already happened; they do not say how long the next phase will last.
Common mistakes
- Treating the 20% threshold as an official rule rather than a convention.
- Declaring a new bull or bear market after one strong or weak week.
- Assuming the next bull or bear market will last as long as a previous one.
Related calculators
This glossary is for education only and is not investment advice. Examples use hypothetical numbers.