A bear market is a prolonged stretch in which prices trend downward and pessimism takes hold. The conventional marker is a fall of roughly 20% or more from a recent high. Falling prices can become self-reinforcing, as nervous holders sell and push prices lower still.
Bear markets are a normal, recurring part of investing rather than an anomaly. They can be brief or grind on for many months, and the bottom is never rung like a bell — it is only obvious in hindsight. Trying to call the exact turn is a reliable way to be wrong.
For a long-term investor a bear market is also when future returns are quietly seeded, since assets are bought at lower prices. That is cold comfort in the moment: only commit money you will not need soon, because prices can keep falling well past the point that already feels painful.
Worked example
A drop of 20% or more from a recent high — as crypto saw repeatedly in 2018 and 2022 — is the usual line for declaring a bear market.
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This definition is general education, not investment advice. Markets — especially crypto — are volatile and you can lose money. Please read our disclaimer and see our methodology.