Bull market vs bear market in crypto

A bull market is an extended period in which prices rise and confidence is high. A bear market is an extended period in which prices fall and confidence drains away. The terms come from the stock market, and crypto has produced unusually sharp examples of both.

How are bull and bear markets defined?

In stocks, a common rule of thumb calls it a bear market when a major index falls 20% or more from its recent high, and a bull market when it rises 20% from a low. Crypto has no agreed threshold. Moves of 20% can happen in a week, so traders use the terms more loosely, for trends lasting many months.

A long bear market in crypto is often called a "crypto winter." Trading volumes shrink, projects run out of money and public attention moves elsewhere.

What have past cycles looked like?

Bitcoin's history shows a repeated pattern of steep climbs followed by deep falls.

• 2017 and 2018. Bitcoin rose from around $1,000 at the start of 2017 to nearly $20,000 that December, during a boom in new token sales known as ICOs. Over the following year it fell by more than 80%.
• 2020 to 2022. Prices climbed through 2020 and 2021, and bitcoin peaked near $69,000 in November 2021. It then fell by more than 75% over the next year, a slide deepened by the failures of the TerraUSD stablecoin and the exchange FTX.

In both downturns, most smaller coins fell further than bitcoin, and many never recovered. Each time, bitcoin itself later passed its old peak. The history of cryptocurrency covers these years in more detail.

What turns one into the other?

No single switch exists, but the same ingredients recur. Bull markets tend to build when borrowing is cheap, new buyers arrive and a persuasive story takes hold. They are amplified by leverage, meaning trades made with borrowed money. The guide to why crypto goes up sets these out.

Bear markets often begin when those supports weaken: interest rates rise, a large platform fails, or buyers simply run out. Forced selling by leveraged traders then speeds the fall, as why crypto crashes explains.

Some analysts link the rhythm to the bitcoin halving, the cut in new supply that occurs about every four years. Others see the timing as a coincidence with wider economic cycles.

Can anyone tell which phase the market is in?

Only with hindsight. Sharp rallies occur inside bear markets, and steep drops occur inside bull markets. Peaks and bottoms are labeled after the fact, and forecasters who called one turn correctly have often missed the next.

Critics also question whether the pattern will persist at all. A few past cycles are thin evidence, and the market has changed as large funds and institutions have entered. History describes what happened. It does not set a timetable.