What Are Bull and Bear Markets in Crypto?

You open your portfolio app and see green numbers everywhere. Your assets are up 20% this week. Your social feeds are full of people posting charts, calling for new all‑time highs, and saying this time is different.

A few months later, it might be the opposite. Red arrows, panic selling, and headlines warning that crypto is dead.

These swings between optimism and pessimism are known as bull and bear markets. The terms come from stock trading, but crypto cycles are usually faster, sharper, and driven by different forces. Knowing how they work is a key step toward becoming a more resilient investor.

The Bull Market: Optimism and Growth

A bull market is a period when asset prices are rising or widely expected to rise. In crypto, people often use it to describe a sustained uptrend where major coins jump well above recent lows, sometimes by 20% or more, because demand is stronger than supply.

How a bull market works

Bull markets feed on confidence. Prices start to rise, investors gain trust, and more people buy in. This steady buying is called accumulation.

As prices climb, media coverage increases. Friends start asking about Bitcoin. New retail traders and large institutions enter the market because they do not want to miss out. That feeling has a name: FOMO, or Fear Of Missing Out.

In stocks, bull markets often follow strong earnings or positive economic data. Crypto can be different. Here, rallies are frequently linked to things like new technology, major protocol upgrades, or loose monetary policy that pushes more money into risk assets.

Signs you are in a bull market

• Sustained price appreciation
  Bitcoin and Ethereum trend upward for months, not just days. When they move higher, many other coins usually follow.

• High sentiment
  Sentiment tools, like the Crypto Fear and Greed Index, regularly show “Greed” or “Extreme Greed.” Social media turns upbeat and confident.

• Increased volume
  Trading volumes on exchanges climb as more people buy, sell, and trade. Liquidity improves, and markets feel active around the clock.

• “Altseason”
  After Bitcoin runs, some traders move profits into smaller cryptocurrencies, known as altcoins. For a while, these can outperform the larger coins.

• Shallow pullbacks
  Dips still happen, but they are usually brief. Buyers quickly step in, and many traders see every drop as a buying opportunity rather than the start of a crash.

The Bear Market: Pessimism and Correction

A bear market is the flip side of a bull market. It is a long stretch of falling prices and negative sentiment.

In traditional markets, a drop of 20% from recent highs is often used as a rule of thumb. In crypto, moves are usually more extreme. A deep bear market, sometimes called a “Crypto Winter,” can see coins fall 80% or more from their peaks.

How a bear market works

In a bear market, greed turns to fear. Investors start to expect more losses and sell to protect what they have left. The result is a flood of sell orders with fewer buyers willing to step in.

Crypto trades 24/7 and does not use the circuit breakers that stock exchanges rely on to pause trading during big drops. That means price declines can be fast and brutal.

Even so, bear markets serve a purpose. They clear out excess leverage, high-risk speculation, and weak or fraudulent projects. Over time, this resets prices to levels that are more sustainable.

Signs you are in a bear market

• Extreme drawdowns
  Major cryptocurrencies can lose a large share of their value, often dropping 75% to 85% from all‑time highs.

• Low liquidity
  Many casual traders leave. Trading volume shrinks. With fewer active buyers, even modest sell orders can move prices a lot.

• High correlation
  In bear markets, coins tend to move together. When Bitcoin falls, most altcoins fall even harder, regardless of their individual use cases.

• FUD
  Fear, Uncertainty, and Doubt dominate the conversation. Negative news, regulatory concerns, and failed projects keep pressure on prices and sentiment.

Real-life examples of market cycles

History does not repeat perfectly, but it often rhymes. Here are a few clear examples of crypto bull and bear cycles.

The 2017 Retail Boom (Bull)

In 2017, a surge of retail traders and the Initial Coin Offering (ICO) trend pushed crypto into the spotlight. Bitcoin climbed to nearly $20,000.

For many people, this was the first time they heard about crypto as more than a niche technology. New tokens launched almost daily, and speculation was intense.

The 2018 Crash (Bear)

After the hype of 2017, prices dropped hard. Over roughly a year, Bitcoin fell about 84% from its high.

Many ICO projects failed or disappeared. What was left was a smaller, quieter market and a group of long-term believers still building.

The 2021 DeFi and NFT Summer (Bull)

The next major bull cycle leaned heavily on smart contracts. Decentralized Finance (DeFi) platforms and Non‑Fungible Tokens (NFTs) drew in both crypto natives and mainstream brands.

At its peak, the total value of the crypto market approached $3 trillion.

The 2022 Deleveraging Event (Bear)

In 2022, rising interest rates and a series of high-profile failures hit the market. The collapse of Terra, followed by FTX and others, triggered forced selling and liquidations.

Bitcoin fell from nearly $69,000 to under $16,000. A large amount of bad debt and leverage was washed out of the system.

Risks and how to stay safe

Both bulls and bears come with their own traps. In bull markets, the risk is getting carried away. In bear markets, it is giving up at the worst possible time.

Red flags in a Bull Market

• Scams and “rug pulls”
  When prices are soaring, scammers rush in. They launch low‑quality or outright fake projects to cash in on excitement. Always research the team, tokenomics, and community before investing.

• Emotional investing
  Buying just because “it keeps going up” is risky. FOMO can lead you to enter at inflated prices right before a correction.

• Over‑leverage
  Using borrowed money to chase gains can backfire quickly. A sharp drop can trigger liquidations and turn small mistakes into outsized losses.

Navigating a Bear Market

• Panic selling
  Many people sell at the bottom because they cannot handle more losses. More experienced investors tend to wait for signs of stabilization or have a plan in advance.

• Exchange risk
  Stressful market conditions can expose weaknesses in poorly managed platforms. To reduce risk, stick to reputable exchanges and consider self‑custody for assets you plan to hold.

• Dollar cost averaging (DCA)
  Instead of trying to predict the exact bottom, some investors spread their buys over time. They invest a fixed amount at regular intervals, which can smooth out the average purchase price.

Summary: Navigating the cycle

Volatility is built into crypto markets. Bull markets do not last forever, and neither do bear markets.

By learning the signs of each phase, you can reduce emotional decisions such as buying when everyone is euphoric or selling when fear takes over. Many successful investors focus on a long-term plan, ignore short-term noise, and pay attention to the underlying value and use case of the assets they own.