Within the fast-moving world of cryptocurrency, fortunes could be made or misplaced in a single day. A tweet or a regulatory shift can ship costs hovering, whereas sudden market shocks like commerce wars can wipe out billions of {dollars} in minutes. This volatility is behind two key phrases that outline cryptocurrency market cycles: bull and bear markets.
Understanding these tendencies isn’t nearly understanding when to purchase or promote—it’s about survival. The variations between a bull and bear market are easy but complicated. A bull market fuels optimism, risk-taking, and value surges, whereas a bear market brings concern, sell-offs, and a check of investor resilience.
This text will clarify what defines these market circumstances, and the way they affect cryptocurrency.
Do you know?
The phrases “bull market” and “bear market” date again to the 18th century. A bull costs with its horns upward, symbolizing rising costs, whereas a bear swipes downward, representing a market decline.
Defining bull and bear markets
In conventional equities markets, a bull market is usually outlined as a sustained interval of rising inventory costs, sometimes lasting months or years, with beneficial properties of 20% or extra. With a couple of key variations, bull and bear markets in crypto perform a lot the identical as conventional finance. In contrast to legacy markets, nevertheless, crypto cycles are amplified by:
Excessive volatility
Steady 24/7 buying and selling
Decrease liquidity
The absence of circuit breakers to sluggish fast value swings
Cryptocurrency traders depend on technical, macroeconomic, and on-chain evaluation to determine tendencies and successfully navigate market cycles.
“Normal technical evaluation instruments like shifting averages, Relative Energy Index, and Bollinger Bands, may also help sign cyclical shifts together with correlated markets such because the NASDAQ and Tech Shares,” Mike Marshall, Amberdata’s head of analysis, informed Decrypt. “Moreover, macro components, together with Fed coverage, inflation, and international occasions, additionally closely affect crypto cycles.”
On January 20, 2025, Bitcoin hit an all-time excessive of $108,786, spurred on by the hope of a friendlier regulatory atmosphere in america underneath newly re-elected President Donald Trump, who had promised the creation of a Strategic Bitcoin Reserve.
Some analysts speculated that the trade was in a bull market, with some even calling it a ‘supercycle’—a chronic interval of financial growth pushed by sustained demand and investor optimism. Nonetheless, that narrative was challenged when Bitcoin tumbled greater than 31% to just about $73,000 two months later.
“Everybody gave the impression to be saying that when the Trump administration is available in, it will give such an enormous enhance to crypto laws,” Alice Liu, Head of Analysis at CoinMarketCap, informed Decrypt at ETH Denver. “However to this point, we’ve not seen that play out in motion.”
Nonetheless, as Liu defined, this drop in Bitcoin’s value didn’t essentially imply a bear market had taken over.
“This can be a technical pullback versus a structural change. The explanation for that’s the liquidity remains to be wholesome,” she stated.
Liquidity—how simply belongings could be purchased and bought with out considerably impacting value—is vital in distinguishing bull and bear markets. Excessive liquidity signifies a market the place transactions happen easily, with minimal value volatility, because of a lot of lively consumers and sellers. In bear markets, liquidity tends to dry up as buying and selling slows, amplifying value volatility.
“Even in response to the market shock, we noticed a particular spike in commerce quantity, averaging round $150 million to $160 million day by day,” Liu stated. “And even now, because the mud has settled somewhat, we nonetheless see a wholesome commerce quantity shifting by the market.”
Indicators of a crypto bull market
📈 Sustained value will increase: Main cryptocurrencies, like Bitcoin, Ethereum, and Solana, expertise constant upward momentum over consecutive weeks and months.
💸 Increased buying and selling quantity and investor curiosity: Retail and institutional traders’ elevated shopping for exercise alerts robust market confidence.
🤑 Constructive market sentiment: Optimism spreads throughout social media, mainstream information, and analyst predictions, typically resulting in FOMO-driven investments.
⛹️ Breakouts from key resistance ranges: When Bitcoin and different main belongings surpass earlier all-time highs, it typically triggers additional bullish momentum.
😎 Development in crypto sectors: Increasing exercise in DeFi, NFTs, and blockchain gaming suggests broader adoption and funding within the house.
Defining the beginning of a Bitcoin bull market isn’t at all times simple, since totally different analysts use various metrics to pinpoint its starting. Some argue that it begins when costs get better from a significant downturn, whereas others imagine it solely turns into clear as soon as earlier all-time highs are surpassed.
“Technically, one may say the bull market begins with capitulation, as costs begin to rise, however most individuals solely understand a bull market in Bitcoin after the prior all-time excessive is reached till the bubble pops a few 12 months later,” Michael Terpin, founder and CEO of Remodel Ventures, informed Decrypt.
Capitulation is when an investor, typically pushed by concern or panic, provides up on attempting to get better losses and sells their belongings. This sometimes occurs after a chronic market downturn triggered by an enormous occasion, just like the collapse of FTX in November 2022.
Indicators of a crypto bear market
📉 Sustained value declines: Main cryptocurrencies expertise extended downward tendencies, typically dropping 20% or extra from their current highs.
🛌 Low buying and selling quantity and investor apathy: Decreased shopping for exercise, with many traders exiting or staying on the sidelines.
😬 Adverse market sentiment: Widespread concern, uncertainty, and doubt—aka FUD”—dominate social media, information headlines, and analyst predictions.
🎢 Failure to interrupt resistance ranges: Bitcoin and different belongings wrestle to get better, repeatedly failing to surpass key value resistance factors.
💤 Decline in crypto exercise: Diminished curiosity in DeFi, NFTs, and blockchain initiatives, together with decrease on-chain transactions and community exercise.
Buyers who maintain onto their cryptocurrency regardless of being in a bear market, and mounting pressures to promote, are thought of to have “diamond palms.”
Do you know?
The time period “diamond palms” originated in 2018 on the r/WallStreetBets subreddit.
On-chain indicators for market cycles
Market Worth to Realized Worth (MVRV) ratio: Compares market capitalization to realized capitalization. A excessive ratio suggests potential corrections, whereas a low ratio signifies undervaluation.
Spent Output Revenue Ratio (SOPR): Measures revenue or lack of moved cash. A price above one alerts profit-taking (bullish), whereas under one signifies promoting at a loss (bearish).
Puell A number of: Assesses miner income relative to historic norms. Excessive values align with market tops, whereas low values recommend miner capitulation and potential bottoms.
Maintain On for Expensive Life (HODL) waves: Analyzes coin holding durations. Elevated long-term holdings recommend bear markets, whereas declines point out distribution in bull runs.
Not all monetary analysts agree {that a} 20% swing needs to be thought of the usual for measuring whether or not a market is in bull or bear territory.
“I feel the everyday 20% threshold that’s generally used to outline bull and bear markets in conventional finance is probably not as relevant to crypto, because of the wider value strikes within the latter and the 24/7 buying and selling that makes crypto extra delicate to international occasions,” Coinbase Head of Institutional Analysis David Duong informed Decrypt.
As Duong defined, crypto is usually used as a proxy when conventional markets are closed, rising the magnitude of the response to crypto costs.
“I’d be extra inclined to make use of metrics just like the 200-day shifting common, together with measuring the sustainability of the given upside or draw back transfer,” he stated. “For instance, how lengthy the transfer lasts to outline a bull or bear market.”
Whereas crypto markets share similarities with conventional monetary markets, they’ve distinctive traits—together with excessive volatility, increased sensitivity to hype, and regulatory modifications that set them aside.
“In relation to cryptocurrency-specific technical indicators, I want the Market Worth to Realized Worth ratio or the MVRV z-score to gauge how markets are shifting,” Duong stated.
Investor sentiment and market tendencies
Investor sentiment performs an vital function in shaping market cycles, with varied indicators providing insights into broad tendencies. Measures just like the CBOE Volatility Index (VIX), the Put/Name Ratio, and the American Affiliation of Particular person Buyers (AAII) Sentiment Survey assist gauge investor confidence and danger urge for food.
One broadly adopted metric, the Concern and Greed Index, aggregates market components to evaluate whether or not traders lean towards warning or pleasure. The Concern and Greed Index ranges from 0 to 100, with decrease values indicating concern, suggesting cautious or bearish investor sentiment, and better values reflecting greed, signaling optimism or bullish market habits.
On March 30, 2025, as of this writing, the Crypto Concern and Greed Index stood at 32 (Concern), up from 17 (Excessive Concern) earlier within the month. Whereas such indices don’t predict value actions, they typically replicate broader shifts in investor considering.
“Buyers typically look to sentiment as a key indicator to evaluate whether or not markets are nearing a high or backside,” Joe Vezzani, CEO and co-founder of crypto sentiment aggregator LunarCrush, informed Decrypt. “Present crypto market sentiment reached its lowest level since August 2024, when volatility spiked because of the unwinding of the yen carry commerce.”
For monetary analyst Jacob King, founder and CEO of WhaleWire, market sentiment additionally relies on whether or not traders imagine the info.
“Indicators exist—in case you belief the info, which is questionable,” King informed Decrypt. “Bitcoin falling under the 200-day shifting common is a significant purple flag. When bulls fail to carry that line, the market construction weakens, and declines speed up.”
Market cycles and long-term investing methods
Markets undergo pure development and decline cycles. Whereas no technique ensures success, those that take a long-term, well-researched strategy are higher positioned to navigate monetary uncertainties.
“It is vital to notice that what defines a bull market in crypto in the present day isn’t simply value—it’s utility, infrastructure maturity, and institutional participation,” Mike Cahill, CEO of Douro Labs, informed Decrypt. “When it comes right down to it, the important thing indicators are transaction quantity acceleration, charge development, stablecoin velocity, and capital formation on-chain. That’s when you already know the subsequent wave is actual.”
Every day Debrief Publication
Begin day by day with the highest information tales proper now, plus unique options, a podcast, movies and extra.
