What is a “Bull Run” ?
A “bull run” refers to a period of significant price increases in financial markets. Particularly emblematic of the cryptocurrency market, the term “bull run” is also applicable to the stock market. This phenomenon is characterized by a prolonged and sustained rise in asset prices. Typically, a bull run is accompanied by strong confidence, renewed interest, and increased optimism among investors.
The Wall Street Bull is a prominent symbol in the imagery of a bull run. Indeed, to gore its enemies, a bull’s horns move from low to high. This parabolic movement resembles the candlestick patterns in trading charts, moving from low to high, transitioning from red to green.
The counterpart to a bull run is known as a bear market.
What causes a Bull Run ?
There are several factors that can trigger and explain a bull run in financial markets :
- Robust Economic Conditions
- Accommodative Monetary Policy
- Pricing or Earnings Expectations
- FOMO (Fear Of Missing Out)
- Emerging Technologies
Often, a prosperous period, strong economic growth, low inflation, or low interest rates can motivate investors to enter the financial markets, with buyers anticipating future profits from companies.
As prices start to rise, some may fear missing out on a lucrative investment opportunity, known as FOMO (Fear Of Missing Out). This self-perpetuating FOMO can create even more euphoria in the markets.
Innovative technology often creates new investment opportunities, which can in turn lead to an upward trend in the market.
How to benefit from a crypto bull run ?
To benefit fully from a crypto bull run, it’s essential to stay informed and vigilant about market news. Research companies that are strategically positioned and whose tokens reflect market trends.
Consider diversifying your investments to reduce risks and earn staking returns. Also, regularly track your portfolio’s performance and be ready to make adjustments as necessary.
Understanding bull run cycles
Bull run cycles consist of specific phases that typically develop in response to the market participants’ psychology and the overall economic environment. This phenomenon occurs in all markets, including cryptocurrencies and other financial markets.
In truth, predicting the start or end of a new cycle is challenging. However, understanding the characteristics of each cycle is crucial to grasp market trends and participate more effectively.
The accumulation phase
This phase occurs when seasoned investors begin purchasing cryptocurrencies, sometimes discreetly, following a period of price declines or stabilization. During this time, there’s reduced cryptocurrency trading, and the overall market sentiment can be pessimistic or uncertain. Key characteristics of this phase include:
- Price Drop : Cryptocurrency prices fall significantly, often following a correction or due to unfavorable market events such as the collapse of FTX or new regulations.
- Discreet Purchases : Investors employ gradual buying strategies, meaning they acquire cryptocurrencies over a longer period to avoid driving up prices.
- Low Trading Activity : There are fewer cryptocurrency transactions during this phase, allowing investors to accumulate without significantly impacting the market.
- Uncertain Sentiment : During the accumulation phase, the general market sentiment can be pessimistic and uncertain, with investors unsure whether a bullish trend is imminent.
The trigger phase
An event or factor suddenly sparks renewed interest and optimism in the cryptocurrency market. For instance, this occurred when rumors circulated about the potential approval of BlackRock’s Bitcoin ETF. Investors noticed the market suddenly surge, boosting their confidence to accumulate more Bitcoin in anticipation that the ETF’s official approval would further increase Bitcoin’s price.
The market uptrend phase
During this phase, the market is characterized by a bullish trend, with a significant increase in prices that attracts more investors. This period is also marked by increased media coverage, which stimulates the adoption of cryptocurrencies by new participants drawn by the rising prices. Key features of this phase are:
- Bullish Trend and Price Increase;
- Growing Adoption ;
- FOMO (Fear of Missing Out) : Investors see prices climbing and feel the fear of missing out on an opportunity, leading them to buy more cryptocurrencies ;
- High Trading Activity.
The alt season phase (or Altcoin Season)
During a bull run, there can be a period where the price of altcoins, which are all cryptocurrencies other than Bitcoin, increases more significantly than Bitcoin itself.
This is known as the “Altcoin Season“. During this time, investors seek higher returns by investing in riskier cryptocurrencies that have the potential for greater rewards.
The euphoria phase
The euphoria phase follows the bull run effect, with new investors flocking to invest as they see cryptocurrency prices soaring. This is referred to as the FOMO effect, the fear of missing out on an opportunity.
The consolidation phase
After rapid rise phases, the market may enter a stabilization phase. Some investors choose to take profits, which can lead to price adjustments or a consolidation period at a new threshold before the market resumes its upward trend or enters a decline phase.
This transition phase is critical for investors, as it can influence the next steps in the cryptocurrency market cycle.
The correction phase or bear market
The bull run cycle usually concludes with a major correction, where prices rapidly decline. Several factors can trigger this correction, such as massive profit-taking by investors, negative news around the cryptocurrency market, stricter regulations, or simply market saturation.
This phase may signify the beginning of a “bear market”, where prices experience a prolonged downtrend, as seen in 2022.
When will the next crypto bull run occur ?
Since May 2022, the cryptocurrency market has been subdued, leaving investors eager and wondering about the timing of the next bull run. Indeed, the effects of bull and bear markets are temporary, and during either, a reversal is always possible.
The year 2023 began positively with a rebound in the global crypto market. However, cryptocurrencies have since experienced significant fluctuations, partly due to regulatory factors. Nonetheless, there is potential for the crypto market to end 2023 on a positive note with an upward trend.
Bitcoin price : 2023 Retrospective
Bitcoin, which was languishing below $20,000 at the beginning of January 2023, eventually crossed this symbolic threshold, reaching $30,000 in April. However, it struggled to maintain this key level, showing constant volatility between $25,000 and $30,000 for several weeks. These fluctuations are largely due to regulatory uncertainties impacting the cryptocurrency market.
It wasn’t until October that Bitcoin began to climb again, breaking the $30,000 barrier on October 23, 2023. At the time of writing, BTC has surpassed $37,000.
Ethereum price : 2023 Retrospective
Ethereum climbed back above $1,500 at the start of 2023, marking a generally positive year for ETH. Despite some dips that temporarily brought its price down to $1,400 in March, it then outperformed in May, surpassing the $2,000 mark.
However, ETH failed to maintain this key level and fell back to $1,500 in September. Like Bitcoin, October was crucial for ETH, which also followed this upward trend. At the time of writing, ETH has exceeded $1,800.
Retrospective of past bull runs
The 2013 bull run was the first major surge in cryptocurrency prices. Bitcoin rose from under $50 to over $260 in just a few months. This increase was fueled by a significant rise in interest in cryptocurrencies among both individuals and the media.
The 2017 bull run is perhaps the most significant. It was during this period that Bitcoin rose from around $1,000 in January 2017 to reach $20,000 in December 2017!
During the 2021 bull run, on November 13, Bitcoin reached its all-time high of $69,000 ! In the 2021 bull run, other cryptocurrencies also experienced a meteoric rise. Ether saw its price increase by almost 500% in a few months.
The entire crypto and NFT market was positively impacted by this surge in interest that lasted for months. During this time, the majority of tokens reached their all-time highs (ATH) before entering the crypto winter of 2022.