What Are Bull and Bear Markets in Crypto?

You open your portfolio app and everything is green. Your assets are up 20% this week, and your social feeds are full of people celebrating profits and calling for new all‑time highs. A few months later, you might see the opposite, with red arrows, panic selling, and gloomy headlines everywhere.

These swings between optimism and pessimism are known as bull and bear markets. The terms come from traditional markets, but in crypto the cycles tend to be faster, sharper, and driven by some very different forces. Knowing the difference is a key step towards becoming a more resilient investor.

The Bull Market: Optimism and Growth

A bull market is a period where asset prices are rising, or the market expects them to rise. In crypto, this usually means a sustained uptrend where major assets climb significantly from their recent lows, often by 20% or more, as demand consistently outweighs supply.

How a bull market works

Bull markets often run on a feedback loop. Prices rise, confidence improves, and more people start buying. This ongoing buying, called accumulation, helps push prices even higher.

As the market heats up, media coverage and social discussion ramp up too. That attention brings in new retail investors and institutions who do not want to miss out, a mindset commonly labelled FOMO, or Fear Of Missing Out.

In shares, bull markets often track things like company earnings or economic growth. Crypto markets can behave differently. Narratives around new technology, protocol upgrades, regulatory shifts, or global liquidity conditions can all play a major role in pushing prices higher.

Signs you are in a bull market

• Sustained price appreciation
  Bitcoin and Ethereum trend higher over weeks and months, not just days. Their strength usually lifts most of the broader market.

• High sentiment
  Market sentiment tools, such as the Crypto Fear and Greed Index, sit in “Greed” or “Extreme Greed” for long periods.

• Increased volume
  Trading volumes on exchanges climb as more capital flows into the market and more people trade each day.

• “Altseason”
  Profits from Bitcoin and Ethereum are often rotated into smaller cryptocurrencies. For a time, many altcoins outperform the major assets.

• Shallow pullbacks
  Dips still happen, but they are usually short-lived. Many traders treat them as buying opportunities rather than early signs of a crash.

The Bear Market: Pessimism and Correction

A bear market is the opposite of a bull market. It is a sustained period of falling prices and negative sentiment. In traditional markets, a drop of 20% from recent highs is often used as a rough marker. In crypto, the swings are usually much more severe. A full “Crypto Winter” can mean falls of 80% or more from peak prices.

How a bear market works

In a bear market, the mood flips from greed to fear. Many investors expect further losses and choose to sell. This mindset can lead to a wave of sell orders with far fewer buyers willing to step in.

Because crypto trades 24/7 and does not have the “circuit breakers” that some stock exchanges use to pause severe moves, prices can fall quickly and keep falling for longer than many expect.

As painful as they are, bear markets can serve a purpose. They tend to flush out excessive leverage, short‑term speculation, and weaker projects. Over time, that reset can pull valuations back towards more sustainable levels.

Signs you are in a bear market

• Extreme drawdowns
  Major cryptocurrencies may fall 75% to 85% from their peaks. Smaller coins can lose even more.

• Low liquidity
  Casual investors and short‑term traders often leave the market. Trading volumes drop, and even modest sell orders can move prices sharply.

• High correlation
  In strong markets, individual tokens might move on their own news or technology. In a bear market, when Bitcoin falls, most other coins tend to fall with it.

• FUD
  Fear, Uncertainty and Doubt dominate conversations. Negative news, regulatory pressure, and high‑profile failures can weigh heavily on sentiment.

Real‑life examples of market cycles

Looking at recent crypto history can help make these market cycles more concrete.

The 2017 retail boom (Bull)

In 2017, retail speculation and the Initial Coin Offering (ICO) boom pushed Bitcoin close to USD $20,000. Thousands of new tokens launched, and crypto entered mainstream discussion in a way it had not before.

The 2018 crash (Bear)

After the excitement of 2017, the market reversed. Over roughly a year, Bitcoin fell about 84% from its peak, and many ICO‑era projects disappeared or became inactive. The period is often cited as one of the first major “Crypto Winters”.

The 2021 DeFi and NFT summer (Bull)

In 2021, attention turned to utility. Decentralised Finance (DeFi) protocols and Non‑Fungible Tokens (NFTs) highlighted what smart contracts could do beyond simple payments. At its peak, the total crypto market capitalisation approached USD $3 trillion.

The 2022 deleveraging event (Bear)

In 2022, rising global interest rates, combined with the collapse of major crypto players such as Terra and FTX, triggered a sharp contraction. Bitcoin dropped from nearly USD $69,000 to under USD $16,000. The downturn wiped out significant amounts of bad debt and excessive leverage across the sector.

Risks and how to stay safe

Bull and bear markets come with different types of risk. In a bull market, people are often too confident. In a bear market, they are often too fearful.

Red flags in a bull market

• Scams and “rug pulls”
  Hype attracts scammers. Low‑quality or fraudulent projects can appear overnight, aiming to raise funds before disappearing. It is essential to research who is behind a token and how the project actually works.

• Emotional investing
  Buying something only because its price is going up is a common way to buy near the top. FOMO can push investors into assets they do not understand.

• Over‑leverage
  Borrowing to trade might magnify gains in a rising market, but it can also lead to rapid losses if prices fall. Liquidations can wipe out positions far faster than many expect.

Navigating a bear market

• Panic selling
  Selling at a loss out of fear is very common. More experienced investors often wait for clearer signs that prices and sentiment have stabilised.

• Exchange risk
  In severe downturns, weaker or badly managed platforms can face liquidity issues or insolvency. Limiting your exposure to any single platform and considering self‑custody options can help manage this risk.

• Dollar cost averaging (DCA)
  Instead of trying to pick the exact bottom, some investors choose to invest a fixed amount at regular intervals. This spreads out their entry price over time and reduces the pressure to time the market perfectly.

Summary: Navigating the cycle

Volatility is part of how crypto markets operate, not a temporary glitch. Bull markets do not last forever, and neither do bear markets.

By learning to recognise the signs of each phase, you can reduce the chance of buying into extreme hype or selling into peak fear. Many long‑term investors focus on a clear strategy, regular risk checks, and the underlying fundamentals of the assets they choose to hold, rather than day‑to‑day price swings.