Riding Crypto Bull & Bear Markets
Known for its extreme volatility, with prices swinging wildly between periods of exuberance and despair, crypto has become synonymous with “Bull” and “Bear” markets.
These are common terms used by those invested in digital assets, so for anyone considering embarking on a crypto trading journey themselves, it’s critical to understand these market characteristics before risking any capital.
Let’s get underway.
What Are Bull and Bear Markets?
Bull Markets Explained
In short, a bull market refers to a period, hopefully prolonged, where asset prices keep climbing higher and higher, across most assets within the market. It could be stocks or fiat currencies, but in the context of this article, we’re talking about digital assets.
For cryptocurrency, meaning Bitcoin, Ethereum, and most altcoins, a bull market is when we continue to see price rises over weeks and months.
This ultimately leads to a “bullish” sentiment where optimism is high, new buyers pour in, and demand accelerates.
Two of the most exciting crypto bull runs took place in 2017 and 2020/21. In 2017, Bitcoin climbed from around $1,000 to $20,000, while in 2020, it shot up from $5,000 to $65,000.
Bear Markets Explained
In contrast to the extreme optimism offered during a bull market, a bear market can be identified by persistent declines in asset prices, driven by negative sentiment and fear.
In the winter of 2018, BTC dropped 80% from the December 2017 peak, with prices grinding lower and lower with each piece of bad news, like ICO scams, exchange hacks, and a lack of public support.
Investors were really in the trenches, but eventually a bull market came. It was shortlived, as a few short years later, the 2021 bear market came along, with the LUNA collapse and FTX bankruptcy proving the catalysts to billions in value getting wiped out.
Characteristics of a Bull Market in Crypto
In a crypto bull market, it’s commonplace to see:
Steep price appreciation across major coins (top 200 by market cap at least)
New all-time highs being reached
High trading volumes as more investors join
Lots of media coverage attracting mainstream interest (this will be a mix of excitement and fear to try and sow uncertainty)
FOMO (fear of missing out) psychology, spurring further buying and risk
How Long Does a Crypto Bull Market Last?
Well, this is the $2tn dollar question!
Nobody can say with certainty, but we can try to find clues in the charts and historical data.
Since 2010, the average crypto bull market has been around two years, but the short timeframe for data doesn’t provide us with great information, as the shortest bull market was just 4 months in 2016, and the longest was around 3 years, ending in late 2013.
Since then, the market landscape has completely changed, making the relevance of these historical data points questionable.
A decade ago, crypto was a rebellious counterculture movement, now it’s so mainstream even BlackRock buys and sells it.
No two cycles are the same, so you need to maintain discipline and focus and not get caught up in the hype and mania near the market top.
Characteristics of a Bear Market in Crypto
In crypto bear markets, these are some identifiable traits:
Prices fall steadily across most coins for an extended period
Low trading volumes (as buyers dry up)
Investors exit their positions and cash out
Pessimistic news cycle focused on failures/risks
Fear takes hold as holders offload positions
How Long Does a Crypto Bear Market Last?
The average duration, since 2010, is around one year, but again, there’s a wide range. The shortest was just 7 months, in 2014, while the longest lasted over 2 years, ending mid-to-late 2018.
November 2021 to December 2022 saw a period called “Crypto Winter” take place, when extreme optimism was rapidly met with extreme negativity, as the cycles moved from bull to bear more intensely than ever before.
The variation of bear market length makes timing calls difficult, and it makes spotting good trades even more complex. Still, you can avoid unnecessary risk by avoiding over-leveraged positions or holding when you really ought to sell.
Of course, there are traders who enjoy bear markets, waiting for the market bottom to buy in at a discounted price. To do that, they’ll need conviction, deep pockets, and diamond hands.
Bull vs. Bear Markets in Crypto: Key Differences
While bull and bear markets are normal aspects of crypto’s cyclical movements, they clearly exist as opposites to one another.
Crypto is known for wild price swings, but that volatility is even more pronounced during major bulls and bears:
In bull runs, we often see parabolic moves of 100%+ gains in short periods, as FOMO grips the market
During bears, flash crashes of 50%+ in a single day are not uncommon, and can be triggered by any bad news
These kinds of movements are typical in crypto, but in traditional markets, would only play out over much longer time scales. Many point to the semi-regulated nature of crypto and use of leverage as key differentiators that make market swings worse.
As for duration:
The average bull market has lasted for around 2 years
The average bear market is just 1 year (approximately)
However, while bulls have tended to last longer, generally speaking, there is significant overlap between the ranges. Each cycle can vary significantly based on unique factors at play.
Liquidity, which is the ease of buying or selling without impacting price, is an indicator of how much money is involved in a particular market. It varies considerably between crypto bull and bear markets:
In strong bulls, trading volumes explode higher and higher as new money pours in - providing ample liquidity for large positions to enter/exit
During bears, however, volume dries up dramatically as buyers disappear - meaning large sell-offs can move the market meaningfully
Both bull and bear markets are sensitive to the news, such as:
Media coverage: The amplification of optimistic or pessimistic narratives can sway the market in different directions
Bitcoin halvings: When Bitcoin halves, it historically signals the start of a new bull run
Institutional adoption: As big players, like Grayscale, BlackRock, PayPal and others of their ilk join in the crypto game, it’s seen as a bullish signal
Regulatory changes: When China banned crypto mining, the market responded, as it did when spot Bitcoin ETFs were legalized in the U.S. However, regulatory changes lead to unpredictable market movements
Collapses within crypto: LUNA, FTX, and going back further, Mt. Gox, have all been key moments for the market, turning sentiment rapidly.
Unexpected macro events: Russia’s invasion of Ukraine, the conflict in Gaza, Trump’s tariff policies with Mexico and Canada – they all appear unexpectedly and impact the crypto markets, pushing it in different ways.
Trading in A Bull Or Bear Market
Different markets require different strategies.
Let’s start with some bull market trading strategies:
Buy the f***ing dip (BTFD): As prices surge higher, many investors buy any short-term pullbacks to juice returns
Hold on for deal life (HODL): Since the overall trend is up, there's merit in riding out volatility and holding your positions
Dollar-cost averaging (DCA): Consistently investing fixed sums over time rather than trying to time entries to perfection
Here are some bear market strategies to consider:
Risk management: Preserving capital becomes your first priority, so consider moving into stablecoins or fiat until the storm passes
Short selling: Allows profiting from downside moves by borrowing assets to sell, then buying them back cheaper
Derivatives trading: Seasoned traders use futures or perpetual swaps to go short or hedge positions
Final Thoughts
Timing crypto bull markets and bear markets is incredibly different, even for professional day traders, with black swan events like LUNA and FTX triggering a market wipe-out of even wealthy traders.
The safest approach is only deploying capital you can afford to lose, having clear risk management rules around position sizing and stop losses, and avoiding leverage.
If all of this sounds like too much news-tracking, complex market ideology, and straight-up economics, perhaps you’d benefit from using a Telegram trading bot to work on your behalf.
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