In the fast-moving world of cryptocurrency, fortunes can be made or lost overnight. A tweet or a regulatory shift can send prices soaring, while unexpected market shocks like trade wars can wipe out billions of dollars in minutes. This volatility is behind two key terms that define cryptocurrency market cycles: bull and bear markets.
Understanding these trends isn’t just about knowing when to buy or sell—it’s about survival. The differences between a bull and bear market are simple yet complex. A bull market fuels optimism, risk-taking, and price surges, while a bear market brings fear, sell-offs, and a test of investor resilience.
This article will explain what defines these market conditions, and how they impact cryptocurrency.
Defining bull and bear markets
In traditional equities markets, a bull market is generally defined as a sustained period of rising stock prices, typically lasting months or years, with gains of 20 or more. With a few key differences, bull and bear markets in crypto function much the same as traditional finance. Unlike legacy markets, however, crypto cycles are amplified by:
- Extreme volatility
- Continuous 24/7 trading
- Lower liquidity
- The absence of circuit breakers to slow rapid price swings
Cryptocurrency investors rely on technical, macroeconomic, and on-chain analysis to identify trends and effectively navigate market cycles.
“Standard technical analysis tools like moving averages, Relative Strength Index, and Bollinger Bands, can help signal cyclical shifts along with correlated markets such as the NASDAQ and Tech Stocks,” Mike Marshall, Amberdata’s head of research, told Decrypt. “Additionally, macro factors, including Fed policy, inflation, and global events, also heavily influence crypto cycles.”
On January 20, 2025, Bitcoin hit an all-time high of $108,786, spurred on by the hope of a friendlier regulatory environment in the United States under newly re-elected President Donald Trump, who had promised the creation of a Strategic Bitcoin Reserve.
Some analysts speculated that the industry was in a bull market, with some even calling it a ‘supercycle‘—a prolonged period of economic expansion driven by sustained demand and investor optimism. However, that narrative was challenged when Bitcoin tumbled more than 31 to nearly $73,000 two months later.
“Everyone seemed to be saying that when the Trump administration comes in, it‘s going to give such a huge boost to crypto regulations,” Alice Liu, Head of Research at CoinMarketCap, told Decrypt at ETH Denver. “But so far, we haven‘t seen that play out in action.”
However, as Liu explained, this drop in Bitcoin’s price did not necessarily mean a bear market had taken over.
“This is a technical pullback as opposed to a structural change. The reason for that is the liquidity is still healthy,” she said.
Liquidity—how easily assets can be bought and sold without significantly impacting price—is key in distinguishing bull and bear markets. High liquidity indicates a market where transactions occur smoothly, with minimal price volatility, due to a large number of active buyers and sellers. In bear markets, liquidity tends to dry up as trading slows, amplifying price volatility.
“Even in reaction to the market shock, we saw a definite spike in trade volume, averaging around $150 million to $160 million daily,” Liu said. “And even now, as the dust has settled a little, we still see a healthy trade volume moving through the market.”
