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Luis Clark
Luis is a personal finance expert who has been passionate and writing about crypto for more than five years.
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What is a Bull Run in Crypto?
Luis Clark
Luis is a personal finance expert who has been passionate and writing about crypto for more than five years.
What is a Bull Run in Crypto?
A bull run or bull market in crypto is indicated by long-term positive price patterns that cause the value of the crypto-assets to increase significantly in a short period. Typically, markets, including stocks and real estate, are said to have a bull run when we witness rising prices of assets by 20%. However, the same metrics cannot be applied to the world of cryptocurrency, where a 20%-30% price increase can be a matter of just a day or two at times.
So, how do you define crypto bull markets? What are the catalysts that trigger it? And above all, when is the next crypto bull run? This article will dive deep into the topic and answer all your queries.
Bull Markets in Cryptocurrency
The term “bull market” or “bull run” is inspired by the fighting style of a bull. When it attacks an opponent, it swings its horns in upward motion with great strength. Hence, any favorable economic condition that results in an upward price action for the entire market is referred to as a bull run. And the individuals who invest their capital, further boosting this positive market sentiment, are said to be “bulls.” This results in a bull market which also marks the end of a previous bear market cycle.
Fundamentally, a crypto bull market is driven by investor sentiments. When the majority of people in the market buy crypto-assets at low prices, with speculations of it increasing in the coming days, weeks and months, it initiates a positive feedback loop. As a result, confidence in the market grows, and more people start to follow the buying trend. This leads to higher demand, and eventually, the demand surpasses the market supply of these crypto assets. This is when the market enters a bull run, and prices of all cryptocurrencies start to skyrocket for the next few months.
What Causes Crypto Bull Runs?
As mentioned before, it is primarily market sentiment that drives the value of crypto assets to new heights. However, several external factors can lead to a bullish moment in the crypto market. The most important of these are discussed below:
Bitcoin Halving
Anyone who has been in the cryptocurrency space for some time must have heard about Bitcoin halving. It is among the biggest external factors that drive the price of Bitcoin and other cryptocurrencies upward.
Ever since Bitcoin was released in 2009, it has been known to follow a four-year cycle. Following this pattern, the price surges during the first quarter, after which we see a significant downtrend in the market. The second half of this pattern is divided into the accumulation and expansion phases, respectively. After that, the asset again enters a bull run, and prices boost to newer highs.
The first quarter, i.e., the bull run, starts roughly around the same time when halving takes place. Bitcoin halving is an event when the mining rewards for the Bitcoin blockchain are cut down to half roughly every four years. Halving reduces the supply of new BTC tokens by 50%, thus increasing its scarcity.
Institutional Adoption
Institutional adoption is the next key factor that drives the crypto market into bull runs. When an enterprise like MicroStrategy invests in Bitcoin, investor confidence rises. Similarly, when a tech giant like Google announces its plans to facilitate crypto payments, people in the crypto space start to feel optimistic about the industry’s future.
Though it’s been over a decade since blockchain and cryptocurrency technology have been publicly available to implement in different areas of finance and business, just a few sectors have adopted it. However, with time, companies from several fields, including payment services, e-commerce stores, and lifestyle brands, continue to realize the benefits of this innovation. Soon Bitcoin and cryptocurrencies will become an integral part of multiple businesses and industries.
Crypto Regulations
Probably the biggest barrier cryptocurrencies face on their way to mass adoption is the Federal Reserve’s tight monetary policies and lack of a proper regulatory framework for this newly emerging fintech sector with smart contracts.
Throughout the last year, the FED in the USA has continued to increase the interest rates at an accelerating pace to fight inflation and bring it down to 2%. As a result of this interest rates hike, demand for all sorts of investment assets and securities decreases, and crypto prices undergo huge dips.
When Does a Crypto Bull Run End?
A bull run ends when the prices of assets and investor confidence in the market start to drop. This adds to selling pressure, and small price dips turn into downward trends over a longer term. In the case of the stock market and real estate, this drop can be marked by an average of 20%-25% decrease in value over a period of several months and sometimes even years.
Bull and bear markets represent opposite ends market sentiment.
However, when it comes to cryptocurrency, people can easily mistake a short-term dip or price correction for the end of a bull market and the start of a bear market. The key here is considering a broader perspective to identify any signs of a trend reversal. This reversal is usually caused by macroeconomic or geopolitical reasons. The sharp downtrend in price is referred to as a bear run.
For instance, after hitting its all-time high of $69,000 in November of 2021, Bitcoin entered a bear market and has been moving downward ever since. This trend shift was caused by several macroeconomic factors and was further accelerated by the conflict between Ukraine and Russia. Consequently, the total market capitalization of the cryptocurrency market declined by more than 70%.
When is the Next Crypto Bull Run?
The cryptocurrency and virtual assets market has been in a bear run for over a year now. Most people in the space are impatiently waiting for the next bull market. But more importantly, they want to know when the next bull run will start. This knowledge will allow them to invest smartly, following the most-reliable strategy of “buying low and selling high”’.
Honestly, it is impossible to figure out the exact date when the market will undergo another trend reversal, causing prices to rise again. However, looking at the historical patterns, we can come up with a rough estimate for when the next bull run will begin.
As discussed earlier, the Bitcoin market price starts to rise around the same time as halving takes place. The next Bitcoin halving is expected to happen in March or April 2024. If the start of the next bull run will only occur during Q1 of 2024 or earlier is impossible to predict. However, it is essential to follow macroeconomic news and regulations to identify areas where individual or groups of digital assets that may receive a boost, or alternatively bust, in the short to midterm.
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