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Home Blog Bull and Bear Market
Article by Yunis
30 September 2022 (Updated 11 June 2024)

Bull and bear cycles are well-known fundamental for financial markets. Crypto markets are not exceptional and show a good example of cycles.

There have been four bull and bear cycles in crypto history. We are at the fourth bear cycle now. Past bear markets give us hints about next bull run.
Bull and Bear Cycles
  • We are currently in a bear market since Q4 2021.
  • Bear markets usually last one to two years.
  • The third bear cycle in crypto is very important to understand the current bear market.
  • High-interest government bonds are preferred over crypto during the bear market.

Bull and Bear market by definition

A bull market is a season or timeframe in which prices are going up or are expected to go up in a strong economic environment. New investors come, and new capital flows into the market during the bull market. A bear market is a bull market's opposite. When the economic environment is not suitable for risky assets, investors prefer to stay in safe assets like bonds, and money flows out of the market. The prices keep going down or are expected to fall in a bear market.

What are Bull and Bear Cycles in crypto?

Bull and bear cycles are not specific to crypto. It has always been known well and provided opportunities for investors. The Crypto market is not an exception and has shown cycles in history. Bitcoin has led the market as a pioneer cryptocurrency, and Bitcoin halvings played an essential role in cycle turns. There have been four cycles since Bitcoin was created. Each bear market ended with Bitcoin halving. Markets witnessed an enormous increase in prices after the halvings.

Crypto bear market cycles;

Bull markets don't last forever. Prices surge to new all-time highs, and investors' risk appetite starts declining at some point. Investors may think that the price is too high and that it is reasonable to sell the assets and buy again after a correction. The market starts evaluating the assets as over-priced and bad news may reverse the trend. The average bear market in crypto lasts around two years.

First Bear Cycle

The first bear cycle of Bitcoin (also crypto) lasted one year between Q4 2011 and Q4 2012 and ended with Bitcoin halving. The first bear cycle is not known and researched well because the market was too young back then. 

Second Bear Cycle

The second bear cycle was between Q4 2013 and Q4 2014. The second bear market started with the Mt. Gox scandal. The price was artificially pumped $1200 level in an illiquid market, and then there was a sharp fall in the price of Bitcoin. The total market cap fell from $15 Billion to $3.5 Billion.

Third Bear Cycle

The third bear cycle was between Q4 2017 and Q4 2018. This cycle is the most studied cycle because the market has shown a big growth with institutional investors, and the total market cap reached $800 Billion and then dropped to $100 Billion. The US authorities stepped in for the first time and sued some blockchain projects, including Ripple. Ripple was founded with a contribution from other governments.
This bear cycle is important to see how institutional investors acted during the bear market. Another point about this cycle is ICOs. Many projects were sued because of conducting alleged securities, which was called initial coin offering (ICO) during this period. The cycle lasted almost a year. The pandemic hit the market when the market started showing some strength. But later, the pandemic became a catalyst for the next bull run.

Fourth and Last Bear Cycle

The fourth and last bear cycle started in Q4 2021 after the Bitcoin price hit an all-time high $69k level in November 2021. We are currently in a bear market in crypto. Almost all central banks from different countries followed expansionary policies to prevent further damage. The global markets had an abundance of money in 2020 and 2021. Money abundance caused high inflation globally. When the pandemic ended, central banks started raising interest rates to avoid higher inflation. Shortage in the money supply in the world caused commodity, stock and crypto prices to fall. Luna crash poured fuel on the fire and triggered deeper drop in prices. 

The global interest rate increase run is about to end at the end of 2022, according to statements from central banks. There is also Bitcoin halving in Q1 2024. Next bull market may start between Q1 2023 to Q1 2024.  

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