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Bear market definition
A bear market is a sustained period of falling prices across a financial market. The term applies to stocks, forex, commodities, indices, crypto, futures, options, and CFDs.
A bear market usually runs on weak investor confidence, poor economic data, falling earnings, high interest rates, recession risk, or thin liquidity. In stock markets, it is often defined as a fall of around 20% or more from recent highs.
A bear market is the opposite of a bull market: a bull market is a sustained rise, a bear market a sustained fall. It can open room for short positions, hedging, and defensive positioning, though sharp rallies still happen inside a broader downtrend.
Bear market Example
The S&P 500 falls from 5,000 to 4,000 over several months. The decline is:
5,000 - 4,000 = 1,000 points
That is a 20% fall, so traders may call the move a bear market if the decline is broad and sustained.
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