June 21, 2022

Stocks and Crypto Have Entered a Bear Market: What You Should Know

Stocks and cryptocurrencies have undergone massive devaluations. Investors and businesses now face a bear market—but it may not last.

The stock and cryptocurrency markets saw a significant decline in the third week of June, as massive sell-offs produced conditions known as a bear market.

Markets Saw Losses Upward of 4%

On Monday, June 13, the Nasdaq Composite fell by 4.7% to $10,809—the lowest value that it has seen since September 2020. The S&P 500, meanwhile, fell by 3.9% on Monday to $3,749, a level roughly 20% below its January highs.

Those losses can be attributed to various effects. One factor that caused investors to sell off their assets was anticipation of a Federal Reserve meeting that on Wednesday raised interest rates by 0.75 percentage points.

Investors may have been concerned about other global events as well. Commodity prices have been driven higher by the Russian-Ukraine war. China’s worsening economy might be another factor that has led to the latest bear market.

The cryptocurrency market also saw massive losses on Monday, as Bitcoin fell by 17% that day to $23,000. Bitcoin’s primary competitor, Ethereum, fell in value to $1,200.

The crypto market has likely been affected by a liquidity crisis concerning the blockchain project Celsius. The project has apparently lost an unspecified amount of funds and is now pausing most of its services due to “extreme market conditions”—a decision that sent panic across the crypto market.

What Does the Bear Market Mean for You?

The bear market will likely have some effect on businesses, as some will struggle to stay afloat in uncertain conditions. 

There are several ways to survive a bear market. The consultancy company Forestlyn suggests that customer validation should be a priority and that companies should rely on bootstrapped capital for funding. It also says that smaller companies may have an advantage over larger companies if they can adjust to market changes more quickly.

However, there may be little reason for concern in the long run, as markets usually recover from adverse conditions.

February and March 2020, which marked the beginning of the COVID-19 pandemic, also produced conditions that were considered a bear market. The market nevertheless recovered most of its losses within just six months.

If this year’s bear market plays out similarly, businesses may find themselves back on solid ground once again in the near future.


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