A bear market occurs when a market experiences prolonged price declines, typically defined as a drop of 20% or more from recent highs. This financial term originates from the way bears attack their prey - swiping their paws downward - symbolizing declining market prices.

In contrast to bull markets (characterized by rising prices), bear markets represent periods of pessimism where selling pressure exceeds buying pressure. The resulting downward trend affects stocks, bonds, cryptocurrencies, and other assets.

Characteristics of Bear Markets:

• Falling stock prices (20%+ decline)
• Decreased trading volume
• Negative investor sentiment
• Higher market volatility
• Economic slowdown or recession

Common Causes:

• Economic recessions
• Pandemic events
• Financial crises
• High inflation or interest rates
• Geopolitical tensions

The Last Major Bear Market (2020 COVID-19):

• Duration: February 2020 - March 2020
• Trigger: Global COVID-19 pandemic
• Impact: S&P 500 fell 34%
• Recovery: Markets rebounded by August 2020 due to government stimulus

Contrarian Investing During Bear Markets:

• Buy assets at discounted prices
• Focus on quality companies with strong fundamentals
• Maintain a long-term perspective
• Example: Investors who bought during the 2008 Financial Crisis saw substantial gains in subsequent years

Bear markets in cryptocurrency follow similar patterns but often show more extreme volatility. Bitcoin, for instance, has experienced several bear markets with price declines exceeding 80%.

While bear markets can be challenging, they're natural parts of market cycles and often create opportunities for patient investors who maintain disciplined investment strategies.

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