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 originated from the way bears attack their prey – swiping their paws downward.

Bear markets are the opposite of bull markets, where prices are rising. During a bear market, investor confidence is low, and selling pressure typically leads to further price decreases.

Common causes of bear markets include:

• Economic recessions
• Global pandemics
• Financial crises
• Major geopolitical events
• Bursting of market bubbles

The average bear market lasts 289 days, though duration can vary significantly. Most bear markets coincide with economic recessions, but not always.

Key characteristics of bear markets:

• Declining stock prices
• Reduced trading volume
• Increased market volatility
• Negative investor sentiment
• Higher unemployment rates
• Lower corporate profits

The most recent significant bear market occurred in 2020 during the COVID-19 pandemic:

• Duration: February 2020 to March 2020
• Trigger: Global COVID-19 spread and economic uncertainty
• Impact: S&P 500 fell 34% from peak to trough
• Recovery: Markets rebounded by August 2020, aided by government intervention

Contrarian investing during bear markets can be profitable. Historical examples:

• 2008/2009 Financial Crisis: Investors who bought during the downturn saw substantial gains in subsequent years
• 2020 Pandemic: Those who invested during March 2020 benefited from the swift market recovery

Cryptocurrency markets experience their own bear markets, often with more extreme price swings than traditional markets. Bitcoin's historical bear markets have seen price declines of over 80% from peak to trough.

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