Bull vs bear markets: what do they mean?

What is a bull market?

Investor.gov, the investor education site of the US Securities and Exchange Commission (SEC), defines a bull market as “A time when stock prices are rising and market sentiment is optimistic.”

It then gives a rough threshold: “Generally, a bull market occurs when there is a rise of 20% or more in a broad market index over at least a two-month period.”

A market index is, in Investor.gov’s words, “a measurement of the performance of a specific ‘basket’ of stocks considered to represent a particular market or sector of the U.S. economy.” Its example is the Dow Jones Industrial Average, which tracks 30 stocks. So the definition is about a whole market, not one share or one coin.

What is a bear market?

Investor.gov’s definition is the mirror image: “A time when stock prices are declining and market sentiment is pessimistic.” And again a threshold: “Generally, a bear market occurs when a broad market index falls by 20% or more over at least a two-month period.”

The Financial Industry Regulatory Authority (FINRA), which oversees US brokers, describes it this way: “When a stock or bond index, or a commodity’s price, falls and keeps falling, it’s considered to be in a bear market.” FINRA also uses the 20% figure — “Generally, a decline of 20 percent or more in a broad market index is said to meet the threshold of a bear market” — and notes the term is often used in contrast with “bull market”, which refers to a large increase in prices.

How do bull and bear markets compare?

Note the word “generally” in both Investor.gov definitions. The 20% figure is a convention for labelling a move, not a legal line. Nobody rings a bell on the day a bull or bear market begins; the label is applied after prices have already moved that far.

What is a market correction?

A correction is a smaller move. FINRA defines it as “when stocks, bonds, commodities or indices reverse course by at least 10 percent before resuming their previous upward or downward trend.” FINRA adds that the term can technically describe a rise or a fall, but it is usually used for a drop in prices.

So, roughly: a fall of 10% is called a correction; a fall of 20% or more over at least two months is called a bear market. A correction does not tell you whether a bear market will follow.

How does the 20% rule work in numbers?

An illustrative index, using round numbers of our own:

The last two rows matter. After a 20% fall, a 20% rise leaves you 4% below where you started. Recovering a loss always takes a larger percentage gain than the loss itself — simple arithmetic, not a forecast.

Do the same terms apply to crypto?

People use “bull” and “bear” for crypto all the time, but the regulator definitions above are written for stocks and broad market indices. We found no regulator definition of a crypto bull or bear market.

What regulators do say is that crypto moves fast. The UK Financial Conduct Authority (FCA) reports that Bitcoin was £93,947 on 6 October 2025 and £65,350 on 1 December 2025 — a fall of 30.44% in under two months. That is larger than the 20% bear-market threshold, but it is one asset, not a broad index. See our guide to crypto volatility for more on how big these swings can be.

Can anyone predict when a bear market will end?

None of the regulators we checked says it can be done reliably, and SEC investor-education staff advise against trying. A piece on Investor.gov by Lori Schock, former director of the SEC’s Office of Investor Education and Assistance, has a section titled “Don’t Try to Time the Market” and says: “Remember, ultimately, it’s time in the market, not timing of the market, that generally leads to long-term investing success.” (The page notes: “This document is no longer being updated and may include information that is out-of-date.”)

The SEC’s bulletin on performance claims makes the wider point: “past performance cannot predict how an investment strategy will perform in the future.” A chart showing the last bear market does not tell you the shape of the next one. And the US Commodity Futures Trading Commission (CFTC), warning about trading bots, says: “AI technology can’t predict the future or sudden market changes.”

What should a beginner do differently in each market?

The honest answer is: decide before the market moves, not during. The same Investor.gov piece says: “Your first reaction during a time of market volatility may be to panic. Don’t.” It recommends having a plan suited to your risk level, spreading your investments, and keeping some money aside somewhere less risky that you can reach at any time.

FINRA describes panic selling — investors selling large amounts “without necessarily doing thoughtful analysis” — and warns the result can be “a self-fulfilling prophecy”. Practical steps that do not depend on guessing the market:

• Only put money into a speculative investment if you could afford to lose all of it — the SEC’s own advice for crypto.
• Decide your position size in advance — our position sizing guide shows the arithmetic.
• If you buy regularly, a fixed schedule removes the need to call the bottom; the DCA calculator shows how it works, without predicting returns.

What are the risks of trading on bull or bear labels?

• The label is late. By definition, a market is called a bear market only after it has already fallen about 20%.
• Labels are not signals. A market that has risen 20% can keep rising or reverse; the definitions say nothing about what happens next.
• Crypto can lose more, faster. The FCA says crypto is high-risk and that you should be prepared to lose all your money.
• Scammers use market moods. Promises of guaranteed returns whatever the market does are a classic red flag — see our crypto scam red flags.

Blockhorizon is an education site. Nothing here is a recommendation to buy, sell or hold any asset.