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What Is a Bull Market, and what do you need to know about it when you own bitcoins?

By Philippe Nadouce

When asset prices are rising and are anticipated to continue to do so, the marketplaces are said to be in a ‘bull trend’. In other words, a bull market is a period of time where the price of a security, commodity or asset, rises steadily. Technically, the popularly accepted definition of a bull run is when stock prices rise by 20% after two losses of 20% each.

Anticipating a bull market trend is generally an opportunity to grow your portfolio using a variety of strategies, including increased buy and hold, and retracement. The opposite (a ‘bear market’) is when prices trend downward and experience substantial decline. Because markets frequently experience day-to-day volatility, bull & bear terms are usually reserved for longer periods of predominantly upward or downward movement and present their own set of opportunities and pitfalls. In this article, we will study bitcoin bull markets only.


Bitcoin halving schedule.

It is often said that bitcoin is an uncorrelated asset. By and large this has been statistically true. As such, it fluctuates apart from the main stock and crypto market indices, thus providing clever investors with the chance to outperform the market. The halving, which happens every 210.000 blocks (every four years), is a feature that provokes a supply shock, and drives the price up as the block mining reward is reduced by 50%. Bitcoin's block rewards are halved, which sharply reduces supply and, consequently, the number of coins available for sale. For the time being, every single halving has taken place in the early stages of a bull market that was followed by a sizable run a year later.

2016 halving (bitcoin was worth a few hundred dollars), was followed by a significant increase to $20,000 in late 2017. In the following one, in 2020, bitcoin price was around $9,000 — by the end of 2021, it reached $69,000.

Katie Talati, director of research at investment firm Arca said recently (and her point of view is shared by many experts in the field):

There are a lot of things that factor into bitcoin’s price. The halving definitely has an impact because it changes a lot of those factors, it changes the economics of the game and makes production more expensive.”

In other words, the cost of mining will instantly double. But it is also true that from a holder or an investor’s point of view, the shock supply increases the price. Historically, we observed that whenever this event occurs the price takes an upwards turn. It will be the same in 2024.

Strategies for 2024 bull run.

Investors in cryptocurrencies will probably exercise caution in 2023, and most analysts don't anticipate a bull run by this year's end. Although it is improbable that Bitcoin will reach prior all-time highs of $69k in 2023, it’s true that the crypto cycle has bottomed out. In other words, most experts agree that bitcoin is entering a recovery and accumulation period.

Regarding the first quarter of 2023, the majority of indicators are showing encouraging signals of recovery, which is excellent news, but investors are still waiting for a rebound. Yet, many profitable cryptocurrencies follow the same strategy, and if conditions improve, a new age of hypergrowth might begin in the crypto markets.

The history of bitcoin, analyzed in chart patterns, works like a predictive clock.

Traditionally, a bear market in Bitcoin lasts 14 months and the bull market between 33-35 months.

The following chart shows that the next bull should be epic!

Institutional adoption in 2023-2024

The biggest catalyst in the 2020 bull market was institutional adoption, stretching from brokerages (Fidelity, Robinhood, etc.), corporations (MassMutual, MicroStrategy, Tesla, etc.), central banks exploring opportunities to invest in cryptocurrencies (and developing their own CBDCs), to small countries such as El Salvador.

Many other institutions around the world have decided to include bitcoin in their balance sheet in the midst of the last bull run but the process of integration of crypto assets in their balance sheet or accountancy structures is slow. These entities will therefore be ready to invest heavily or will reveal the magnitude of their investments during the next bull run of 2024.

Chart from:

2023, 2024 and 2025 might be pivotal years in terms of the magnitude of investment in crypto by not only all kinds of very large corporations (Mutual & Pension funds, insurance companies, etc.), but also by central banks of medium-sized economic power and by several small and medium-sized countries.

According to Fidelity’s 2022 crypto adoption report, 58% of institutional investors put money into digital assets worldwide. There is also increasing adoption among traditional hedge funds, with one in three hedge funds invested in digital assets, compared with one in five last year. A Coinbase survey released in November 2022 revealed that 62% of institutional investors in digital assets had incremented their allocations in the past year.

For many of these institutions and countries, crypto’s earnings and volatility is an opportunity to make money regardless of the market’s direction. It is realistic to anticipate that Bitcoin will reach $150,000 by the end of 2025 if the cryptocurrency market and Bitcoin continue to follow their historical tendencies from the previous 13 years. According to institutional analysts and investors, it is paramount to mention regulation as an obstacle to adoption from all sorts of corporate and financial entities. Since the FTX meltdown, regulatory clarity is the top catalyst for the crypto asset class to become unstoppable in the future.

Watch stablecoins during the next bull market.

Each end of a market cycle in crypto acts like a powerful vacuum cleaner which swallows the mess left by scammers and the lack of a sound regulatory framework.

But things are getting better.

Adoption will bring more stability and will expand the size of the crypto market. Stablecoins are one of the most important parts of these markets. The crypto ecosystem needs them to bridge financial institutions in the outside world to the basic hodler.

Stablecoins represent more that 130 billion of the total crypto market cap in March 2023, and their share will only get bigger by the end of the next bull run in 2026.

Then, they should attract the attention of the banking system, which will launch its own stablecoins. Every major systemic bank will have one. This legitimization will boost further the adoption trend, and people will start to see digital assets as less risky and as a real assert class that should no longer be viewed as “rat poison”.

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