Wondering what a bull market is in cryptocurrency? In this guide, we’ll break down everything you need to know about crypto bull markets — including popular bull market strategies and a history of previous bull markets.
What’s the difference between a bull and bear market?
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Let’s walk through the difference between a bull and bear market.
Bull Market: In a bull market, cryptocurrency prices are up by at least 20%. Bull markets usually come with increased investor optimism and more media attention on the cryptocurrency ecosystem.
Bear Market: In a bear market, cryptocurrency prices are down by at least 20%. Bear markets usually come with increased investor pessimism and less media attention on the cryptocurrency ecosystem.
Remember, the crypto ecosystem is highly volatile. Since Bitcoin was officially launched in 2009, cryptocurrency has seen multiple bull and bear markets.
How do I remember the difference between ‘bull’ and ‘bear’ markets?
The term "bull" is derived from the way bulls attack—pushing upward with their horns, symbolizing rising markets. Conversely, "bear" comes from the way bears attack—swiping downward, which symbolizes falling markets.
What is a bull run?
A bull run is an intense phase within a bull market where crypto prices rise quickly, driven by strong investor optimism and increased buying activity.
Because the crypto market is so volatile, prices can increase rapidly in a short span of time! From 2020-2021, the price of Bitcoin went up from $9,000 to $64,000!
How do crypto bull markets start?
Crypto bull markets can be triggered by multiple factors that are a positive feedback loop of increased optimism and increased value.
To get a better understanding of how crypto bull markets happen, let’s take a look at some of the factors that influenced the 2020 bull market.
- Bitcoin halving: The Bitcoin halving in 2020 meant a decrease in the supply of Bitcoin and increased media attention on the cryptocurrency ecosystem.
- Inflation fears: As inflation skyrocketed during COVID-19, many investors became interested in Bitcoin — a cryptocurrency with a limited supply designed as an alternative to inflationary fiat currencies.
- NFTs: During the 2020 bull run, new technologies like NFTs came to the forefront. This drove a new wave of investor interest — as many artists and creators entered the cryptocurrency ecosystem for the first time.
- Low interest rates: Low interest rates during the pandemic meant that investors could no longer expect high returns from holding ‘safe’ assets like government bonds. As a result, many investors turned to ‘riskier’ investments like cryptocurrency and NFTs.
- Investor interest: It’s likely that many investors had more time to research cryptocurrency during the COVID-19 lockdowns.
It’s usually difficult, if not impossible, to predict bull markets before they happen. Usually, analysts only recognize bull markets after they have already started.
How long do bull markets last?
The length of bull markets in crypto can vary greatly but have historically lasted from several months to over a year.
Why do crypto bull markets turn into bear markets?
Just as there are multiple factors that may cause a bull market, there are multiple factors that contribute to its end. Let’s walk through a few potential factors:
- Negative news in the crypto ecosystem: Negative developments in the cryptocurrency ecosystem — such as major hacks or exchange bankruptcies — can reduce the demand for cryptocurrency. For example, issues around the exchange Mt. Gox have been cited as the reason why the first two Bitcoin bull markets ended in 2011 and 2013.
- Macroeconomic news: The general state of the economy can lead to investors taking money out of crypto. For example, some analysts have said that in a recession, institutional investors are less likely to invest in risky investments like crypto.
- Strict regulations: While it’s unlikely that regulators will ban crypto completely, strict regulations can slow down activity in the crypto ecosystem. In the past, cryptocurrency prices have gone down in response to regulations in major markets like China and the United States.
Crypto bull market strategies
Do your due diligence
Before you invest, do your due diligence when it comes to researching the cryptocurrency project. Never invest more than you can afford to lose.
During a bull market, it’s easy to be tempted by cryptocurrency projects that offer high interest rates or make extravagant promises for the future. It’s important to keep in mind that investors during the 2020-2021 lost millions on LUNA — a project that promised high interest rates.
Stay informed
You should keep up with market news that could impact the value of your crypto-assets.
For example, the price of cryptocurrencies traditionally goes up before and after a Bitcoin halving. However, prices could go down with news of increased regulations on cryptocurrency or a bankruptcy of a prominent cryptocurrency exchange.
Diversify holdings
Diversifying your cryptocurrency portfolio can be a great way to reduce project-specific risk. You can use the following factors to determine which cryptocurrencies to invest in:
- The project’s white paper and roadmap
- The past performance of a project
- The project’s community
- Technical analysis indicators
It’s also a good idea to put a portion of your savings into more traditional investments — such as the S&P 500. While other types of investments may not give you comparable returns to cryptocurrency, they can act as a hedge in the case of a potential downturn in the crypto market.
Look for safe ways to earn interest
Cryptocurrency offers many ways to earn passive income on your holdings. Many exchanges offer interest rewards — while DeFi protocols and Proof of Stake blockchains give users the opportunity to stake their crypto!
Again, it’s important to do your research before you deposit your cryptocurrency on an interest-bearing platform. If an interest rate seems too good to be true, it probably is.
Secure profits
Many investors are tempted to hold their cryptocurrency in the hope of future returns. However, there’s no guarantee that the market will continue to go up. Many financial advisors recommend taking some profits in case of an unexpected market downturn — especially if you need the money to pay bills in the immediate future.
Set money aside for tax purposes
If you decide to take profits on cryptocurrency, it’s important to set some money aside for tax purposes. During previous bull markets, sudden crashes left investors with large tax bills they could no longer afford.
To get an estimate of how much you could owe in taxes, check out our crypto tax calculator.
Consider using HIFO
If you’re taking gains during a bull market, using an accounting method like highest-in first-out can minimize your tax bill!
By using the accounting method highest-in first-out (HIFO), the highest value cryptocurrency you acquired is the first you dispose of. This can potentially reduce your capital gains tax.
Remember, you should speak to a tax professional to see if switching your accounting method makes sense for your unique situation.
Crypto bull run history
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Let’s walk through a quick history of cryptocurrency bull runs.
Each cryptocurrency bull run brings new investors, developers, and entrepreneurs into the ecosystem. While each bull market eventually ended, the cryptocurrency ecosystem has generally become more valuable and more developed over time.
After the end of each bull run, cryptocurrency skeptics often rush to proclaim that cryptocurrency is over — without considering that the ecosystem has historically seen extreme volatility since its creation.
2010 Bull Run
In June 2010, 1 BTC traded for $0.08. Within a year, its price had risen to $29.38!
At this time, the cryptocurrency ecosystem was still in its infancy. Most of the popular exchanges and wallets of today had not yet been created, and most people were not sure whether Bitcoin would be a viable technology in the years to come.
Mt. Gox — an exchange that once accounted for more than 70% of all BTC transactions — was created in 2010. However, the exchange was hacked in 2011 — an event that seemed to mark the end of the bull market. The hack highlighted the fact that at this point, investors did not have an easy and reliable way to buy Bitcoin.
2013 Bull Run
In 2013, BTC reached a new high of $1,100! During this bull run, Bitcoin began to get coverage in mainstream outlets like TIME magazine.
Some have suggested that the financial crisis on Cyprus — where the government was forced to tax residents’ bank deposits — led to many investors turning to BTC, a currency that was not controlled by central banks.
It’s likely that this bull run ended after Mt. Gox was once again hacked in early 2014 and went insolvent shortly after. This seemed to highlight the lack of regulation and proper security measures in the cryptocurrency ecosystem.
2017 Bull Run
The 2017 bull run is commonly cited as the time when Bitcoin finally broke through to the mainstream. During this bull run, BTC reached a new high of $20,000.
By this time, reliable exchanges like Coinbase and Kraken offered investors a way to buy and sell cryptocurrencies securely. For the first time, it seemed like the cryptocurrency ecosystem had reliable exchanges and wallets.
In addition, the cryptocurrency ecosystem was now bigger than just Bitcoin. Ethereum was founded in 2014 — allowing developers to create smart contracts and decentralized applications.
During this bull market, cryptocurrency started facing regulatory issues around the world. China halted withdrawals on major exchanges. Meanwhile, US regulators cracked down on ‘initial coin offerings’ — popularly known as ICOs.
2020-2021 Bull Run
The 2020 bull run saw BTC reach a high of nearly $69,000.
During this bull market, the narrative of Bitcoin as ‘digital gold’ became widespread. Many investors started buying Bitcoin as a hedge against inflation and even potential economic collapse.
Cryptocurrency became legitimized during this bull run — as established non-crypto companies like MicroStrategy and Square started investing in BTC. In addition, Coinbase went public in a much-hyped IPO.
In addition, non-fungible tokens came into prominence for the first time. Artists like Beeple sold NFT pieces for millions of dollars, while prominent NFT collections like Bored Ape Yacht Club attracted famous celebrities like Steph Curry and Eminem.
The aftermath of the bull run saw many prominent exchanges going bankrupt — including Voyager, FTX, BlockFi, Celsius, and more. While exchanges like FTX had conducted outright fraud, other exchanges had simply overextended cryptocurrency loans. These bankruptcies led to calls for more regulations on cryptocurrency from US politicians.
In conclusion
Since its creation, cryptocurrency has seen high degrees of volatility. Regardless of whether the market is in a bear or bull market, it’s important to stay level-headed and make wise investment decisions.
Frequently asked questions
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