Is a bullish trend a rise or a fall? Understanding the cycles of the crypto market

When discussing the cryptocurrency market, vivid metaphors—bulls and bears—are often used. What do they mean, and how can you profit from them? Let’s explore how the main market phases work and why it is important for investors to distinguish these periods to make the right decisions.

Growth and Pessimism: Two Sides of the Crypto Market

Upward Phase: When the Market Races Upwards

A bullish trend is a period when cryptocurrencies demonstrate a steady and sustained increase in value. During such times, the market is filled with optimism—new investors are entering positions en masse, expecting further price increases, and demand significantly exceeds supply.

Characteristics of an Upward Trend:

• Asset prices increase by 20% or more over an extended period
• Exchanges record record trading volumes and an increase in new participants
• Positive media coverage—launch of new blockchain projects, corporate investments in digital assets
• Market capitalization grows, attracting institutional players

Historical Example: The 2020–2021 period showed a powerful bullish cycle, when Bitcoin moved from $10 000 to $69 000, becoming one of the most significant price surges in history.

Downward Phase: When Fear Dominates

The opposite of the upward trend is a bear market, a period when cryptocurrencies fall in price, and participant psychology shifts to pessimism. Investors rush to sell assets, fearing even greater losses, which only accelerates the decline in value.

Signs of a Downward Phase:

• Price drops of 20% or more from peak values
• Mass sell-offs due to fear of further losses
• Decreased activity on trading platforms and lower volumes
• Negative news background—regulatory bans, economic crises, force majeure events

Historical Example: 2018 was a classic bear cycle, when Bitcoin plummeted from $20 000 to $3 000, demonstrating the market’s volatility.

Comparative Table: Main Differences

How to Profit in Different Cycles

Upward Market: Growth Strategies

When a bullish trend creates favorable conditions for investors, several proven approaches are available:

1. Long-term Investing — strategy of buying cryptocurrencies with a view to multi-year capitalization growth
2. HODL Position — holding assets despite short-term fluctuations and temporary pullbacks
3. Trend Trading — entering positions during local dips and taking profits at growth peaks

Downward Market: Protection and Profit

When the market turns downward, experienced traders use alternative methods:

1. Shorting — opening short positions to profit from falling prices
2. Stablecoins — transferring capital into protected assets to preserve value
3. Risk Diversification — investing in various assets and blockchain segments

How to Recognize a Trend Reversal

Pinpointing the exact moment of phase change is challenging, but there are reliable signals:

Transition to an Upward Phase:

• Growing public interest in cryptocurrencies, increasing trading volumes
• Reversal of charts after a prolonged downward movement
• Positive news about blockchain development and institutional adoption of crypto

Transition to a Downward Phase:

• Sharp price drops following sustained growth
• Hasty sell-offs and decreased participant activity
• Increased regulatory pressure and alarming news

Key Takeaways

Understanding market cycles is a fundamental skill for successful cryptocurrency trading. Each phase offers its own opportunities: upward trends open the way to profit accumulation, while downward phases require strategic caution and protective tools. Use technical analysis, diversify your portfolio across different assets, and make informed decisions—this will help minimize losses and monetize each market cycle.

Frequently Asked Questions

What is the average duration of bullish and bearish cycles?

Timeframes vary: upward phases often last 1–3 years, while downward phases can last from several months up to 1.5–2 years depending on macroeconomic factors.

Is it possible to generate income during a market decline?

Absolutely—shorting, investing in stablecoins, and prudent diversification allow earning even in unfavorable periods.

What signals indicate a market phase change?

Technical price actions, changes in trading volumes, and shifts in the informational background are the main indicators of trend reversal.