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.
Did you know?
The terms “bull market” and “bear market” date back to the 18th century. A bull charges with its horns upward, symbolizing rising prices, while a bear swipes downward, representing a market decline.
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.”
Signs of a crypto bull market
- 📈 Sustained price increases: Major cryptocurrencies, like Bitcoin, Ethereum, and Solana, experience consistent upward momentum over consecutive weeks and months.
- 💸 Higher trading volume and investor interest: Retail and institutional investors’ increased buying activity signals strong market confidence.
- 🤑 Positive market sentiment: Optimism spreads across social media, mainstream news, and analyst predictions, often leading to FOMO-driven investments.
- ⛹️ Breakouts from key resistance levels: When Bitcoin and other major assets surpass previous all-time highs, it often triggers further bullish momentum.
- 😎 Growth in crypto sectors: Expanding activity in DeFi, NFTs, and blockchain gaming suggests broader adoption and investment in the space.
Defining the start of a Bitcoin bull market isn’t always straightforward, since different analysts use varying metrics to pinpoint its beginning. Some argue that it starts when prices recover from a major downturn, while others believe it only becomes clear once previous all-time highs are surpassed.
“Technically, one could say the bull market begins with capitulation, as prices start to rise, but most people only perceive a bull market in Bitcoin after the prior all-time high is reached until the bubble pops about a year later,” Michael Terpin, founder and CEO of Transform Ventures, told Decrypt.
Capitulation is when an investor, often driven by fear or panic, gives up on trying to recover losses and sells their assets. This typically happens after a prolonged market downturn triggered by a massive event, like the collapse of FTX in November 2022.
Signs of a crypto bear market
- 📉 Sustained price declines: Major cryptocurrencies experience prolonged downward trends, often dropping 20% or more from their recent highs.
- 🛌 Low trading volume and investor apathy: Decreased buying activity, with many investors exiting or staying on the sidelines.
- 😬 Negative market sentiment: Widespread fear, uncertainty, and doubt—aka FUD”—dominate social media, news headlines, and analyst predictions.
- 🎢 Failure to break resistance levels: Bitcoin and other assets struggle to recover, repeatedly failing to surpass key price resistance points.
- 💤 Decline in crypto activity: Reduced interest in DeFi, NFTs, and blockchain projects, along with lower on-chain transactions and network activity.
Investors who hold onto their cryptocurrency despite being in a bear market, and mounting pressures to sell, are considered to have “diamond hands.”
Did you know?
The term “diamond hands” originated in 2018 on the r/WallStreetBets subreddit.
On-chain indicators for market cycles
- Market Value to Realized Value (MVRV) ratio: Compares market capitalization to realized capitalization. A high ratio suggests potential corrections, while a low ratio indicates undervaluation.
- Spent Output Profit Ratio (SOPR): Measures profit or loss of moved coins. A value above one signals profit-taking (bullish), while below one indicates selling at a loss (bearish).
- Puell Multiple: Assesses miner revenue relative to historical norms. High values align with market tops, while low values suggest miner capitulation and potential bottoms.
- Hold On for Dear Life (HODL) waves: Analyzes coin holding periods. Increased long-term holdings suggest bear markets, while declines indicate distribution in bull runs.
Not all financial analysts agree that a 20% swing should be considered the standard for measuring whether a market is in bull or bear territory.
“I think the typical 20% threshold that’s commonly used to define bull and bear markets in traditional finance may not be as applicable to crypto, due to the wider price moves in the latter and the 24/7 trading that makes crypto more sensitive to global events,” Coinbase Head of Institutional Research David Duong told Decrypt.
As Duong explained, crypto is often used as a proxy when traditional markets are closed, increasing the magnitude of the reaction to crypto prices.
“I’d be more inclined to use metrics like the 200-day moving average, in combination with measuring the sustainability of the given upside or downside move,” he said. “For example, how long the move lasts to define a bull or bear market.”
While crypto markets share similarities with traditional financial markets, they have unique characteristics—including extreme volatility, higher sensitivity to hype, and regulatory changes that set them apart.
“When it comes to cryptocurrency-specific technical indicators, I prefer the Market Value to Realized Value ratio or the MVRV z-score to gauge how markets are moving,” Duong said.
Investor sentiment and market trends
Investor sentiment plays an important role in shaping market cycles, with various indicators offering insights into broad trends. Measures like the CBOE Volatility Index (VIX), the Put/Call Ratio, and the American Association of Individual Investors (AAII) Sentiment Survey help gauge investor confidence and risk appetite.
One widely followed metric, the Fear and Greed Index, aggregates market factors to assess whether investors lean toward caution or excitement. The Fear and Greed Index ranges from 0 to 100, with lower values indicating fear, suggesting cautious or bearish investor sentiment, and higher values reflecting greed, signaling optimism or bullish market behavior.
On March 30, 2025, as of this writing, the Crypto Fear and Greed Index stood at 32 (Fear), up from 17 (Extreme Fear) earlier in the month. While such indices don’t predict price movements, they often reflect broader shifts in investor thinking.
“Investors often look to sentiment as a key indicator to assess whether markets are nearing a top or bottom,” Joe Vezzani, CEO and co-founder of crypto sentiment aggregator LunarCrush, told Decrypt. “Current crypto market sentiment reached its lowest point since August 2024, when volatility spiked due to the unwinding of the yen carry trade.”
For financial analyst Jacob King, founder and CEO of WhaleWire, market sentiment also depends on whether investors believe the data.
“Indicators exist—if you trust the data, which is questionable,” King told Decrypt. “Bitcoin falling below the 200-day moving average is a major red flag. When bulls fail to hold that line, the market structure weakens, and declines accelerate.”
Market cycles and long-term investing strategies
Markets go through natural growth and decline cycles. While no strategy guarantees success, those who take a long-term, well-researched approach are better positioned to navigate financial uncertainties.
“It’s important to note that what defines a bull market in crypto today isn’t just price—it’s utility, infrastructure maturity, and institutional participation,” Mike Cahill, CEO of Douro Labs, told Decrypt. “When it comes down to it, the key indicators are transaction volume acceleration, fee growth, stablecoin velocity, and capital formation on-chain. That’s when you know the next wave is real.”
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