Bearish

An economic term referring to a market phase in which asset prices such as stocks, exchange rates, and commodities decline or a currency's value weakens.

Bearish

Overview

Bearish (Korean: 약세; Hanja: 弱勢) is a term in financial markets that refers to a phase in which asset prices are falling or are expected to move in a downward direction. It is used in almost all asset markets, including stocks, bonds, foreign exchange, commodities, and cryptocurrencies, and its opposite concept is bullish (Korean: 강세; Hanja: 强勢). Bearishness does not simply mean a phenomenon of falling prices; it encompasses the overall state in which market participants' sentiment, supply and demand, trading volume, and other factors are aligned in a downward direction.

Main Content

Definition and Etymology

The expression 'bearish' (Korean: 약세) is widely believed to have originated from bear skin jobbers in 18th-century London. They traded by selling bear skins in advance and then buying them cheaply when prices later fell to earn a profit; from this, investors betting on price declines came to be called 'bears.' In Korean, this is rendered directly in expressions such as 'bear market,' 'bearish argument,' and 'bearish shift.'

Meaning of Bearishness by Market

  • Stock market: When an index falls more than 20% from its high, it is generally classified as a bear market. When an individual stock underperforms the market average, it is called a 'bearish stock.'
  • Foreign exchange market: A decline in the value of a specific currency relative to another currency is called 'weakness.' For example, when the KRW/USD exchange rate rises, the value of the Korean won is weak and the dollar is strong.
  • Bond market: When interest rates rise and bond prices fall, this is described as bond weakness. Interest rates and bond prices move in opposite directions.
  • Commodities and cryptocurrencies: This refers to a phase in which prices fall due to slowing demand, oversupply, tighter regulation, and other factors.

Factors That Create Bearishness

Bearish phases usually arise from complex causes. Representative examples include concerns about recession, interest rate hikes, worsening corporate earnings, geopolitical risks, liquidity contraction, and weakened investment sentiment. Conversely, in a bull market, earnings improvement, accommodative monetary policy, liquidity expansion, and similar factors serve as drivers.

Investment Strategies and Sentiment

In a bear market, strategies such as short selling (shorts), inverse ETFs, buying defensive stocks (consumer staples, healthcare, utilities), increasing cash allocation, and moving into safe assets such as bonds and gold are used. In addition, a bear market is a time when the VIX (volatility index), called the 'fear index,' surges; investor sentiment contracts, trading volume declines, and selling pressure tends to increase. Conversely, a temporary rebound is called a 'Dead Cat Bounce,' and judging whether this is a trend reversal or a temporary rebound is a key task for investors.

Latest Trends

In the 2024–2025 market, volatility was high as strength in technology stocks driven by the artificial intelligence (AI) boom intersected with geopolitical risks. In August 2024, the Bank of Japan's rate hike and weak U.S. employment indicators coincided, causing global stock markets to suffer a temporary bearish phase, and afterward they rebounded as expectations for Federal Reserve rate cuts revived. In 2025, expanded U.S. tariff policy, U.S.-China technology conflict, and the continued slump in Chinese real estate made bearishness in certain sectors stand out, and some industries such as semiconductors and secondary batteries showed a clear correction phase.

In addition, as the share of retail investors has grown, the surge in 'meme stocks,' leveraged ETFs, and options trading is cited as a factor expanding volatility during bearish phases. In the cryptocurrency market, institutional fund inflows increased after the approval of spot Bitcoin ETFs, but sharp declines and surges in response to macroeconomic indicators repeated, making switches between bearish and bullish phases more frequent.

In the Korean market as well, at the end of 2024, political uncertainty and a sharp rise in the exchange rate overlapped with weakness in the Korean won and sluggishness in the KOSPI, and in 2025, the value-up program and dividend expansion policies acted as factors partially easing bearish sentiment. Experts advise that even in a bear market, diversification, rebalancing, and maintaining a long-term perspective are important.

Related Topics

  • [[강세]]
  • [[주가]]
  • [[환율]]
  • [[공매도]]
  • [[경기침체]]
  • [[변동성지수]]