What Will Spark the Next Crypto Bull Run?

The previous bull run occurred between 2020 and 2021 when the crypto market peaked in November 2021, when the crypto market value reached around $3 trillion, and Bitcoin reached an all-time high of $64,000. The market is driven by the storm of web 3 development, institution adoptions, US stimulus packages, and NFT and metaverse booms. 

Until now, the cryptocurrency market has been tracing the same ups and downs, and the entire 2022 appears to be driven by bearish periods. But how will the situation change and make a turnaround? 

This article dive into the depth understanding of the actual meaning of a ‘’Bull Run’’ and how it works, then examines the Cryptocurrency Market Capitalization charts to see if the next bull run will begin in 2023. 

What is the Definition of Bull Run?

A bull run usually occurs during a bull market and requires a more extended period of rising prices and market optimism. Asset prices are consistently rising, creating opportunities for financial market investors. 

Whether you’re new or experienced in the cryptocurrency market, believing that the value of a coin will rise in the future will motivate you to buy more when demand rises. It will attract more investment, resulting in price increases, market cap growth, and the potential for a bull market.

What Causes a Crypto Bull Run?

Rising cryptocurrency prices are frequently the result of a series of events that help to boost the confidence of crypto investors. When cryptocurrency traders are bullish on the economy and the coin’s projects, they are more likely to trade or invest in cryptocurrency. 

Rising cryptocurrency prices will make investors gain profit and also increase market confidence. The cryptocurrency market’s overall value rises, and due to the constant increase in demand, it forms a Bull Run. 

Several factors contribute to increased investor optimism.  

  • Relaxed regulations permit more cryptocurrency trading.
  • High employment levels leave people with more money to invest.
  • Government policies that result in financial growth for businesses.
  • Strong GDP increases overall confidence.
  • Increased wages and lower inflation allow for more cryptocurrency investment.
  • Large amounts of spending help the economy.

The Market cap can be used by investors to forecast market trends. If the total value of the crypto market cap continues to rise, it strongly suggests the start of the crypto bull run, as it reflects market demand for cryptocurrencies. 

Even though many cryptocurrencies’ market cap can swing dramatically due to volatility, and it is currently worth less than $1 T, there is a high probability that once the economy recovers, investors will have more capital available in their hands and will begin to invest in Cryptocurrencies again. 

What Describes the Beginning of a Bull Market?

The Crypto bull market, which will eventually form the Bull Run, is defined by a few distinct characteristics: 

Increased demand: More people will be looking to buy cryptocurrency rather than sell it.

Increased trade volume: When you look at trading metrics, you’ll notice more buying and selling.

Unexplained growth: Increased confidence can cause markets to rise that would not otherwise. Even if there is no apparent reason, cryptocurrency prices may increase significantly.

Bookended by downturns: There will be a sharp drop in crypto assets before and after the bull market.

Unrealistic valuations: A bull market can have some positive characteristics. Unfortunately, they can result in bubbles, in which crypto values unexpectedly rise. 

Impressive returns: During a bull market, investor returns average around 112 per cent. Because of the high returns, it is simple for people to profit from cryptocurrency. 

The chart below demonstrates the past four years of total cryptocurrency market cap. At the beginning of 2021, the total market cap was around $800 B, and then the market began to rise and peak in November 2021, with a total market cap of nearly $3T. 

Total Cryptocurrency Market Cap from November 17, 2018, to November 17, 2022.
Source: https://coinmarketcap.com/charts

What Describes the End of a Bull Market?

There will be fluctuations, dips, and corrections even during a bull market, and short-term downward movements can be easily misinterpreted as the end of a bull market. This is why, when looking at price action over more extended time frames, it’s important to consider any potential signs of a trend reversal from a broader perspective. Investors can gain when they are “buying the dip.”

Bull markets, as history has shown, do not last forever. Investor confidence will begin to dwindle, possibly caused by anything from bad news and unforeseen circumstances, such as the COVID-19 pandemic. A sharp price decline can trigger a bear market in which investors’ confidence falls as they see prices and sell off the asset as its value decreases to prevent further loss. When the market’s value begins to fall regularly, it indicates that the Bull Run is ending. The chart below shows that after the crypto market cap peaked at the end of 2021, the crypto market began to fall, and the bull run came to an end soon after. 

Total Cryptocurrency Market Cap from November 17, 2018, to November 17, 2022.
Source: https://coinmarketcap.com/charts

Will Crypto Bull Run Happen in 2023? 

Bitcoin bull runs have historically corresponded to the four-year market cycle, which consists of accumulation (buying), an uptrend, distribution (selling), and a downtrend. This process’s accumulation phase is expected to begin in 2023, though some believe it may be delayed until 2024.

According to the chart, the total Crypto Market Cap is currently at around $800 B, which is the same level as at the end of 2020 to the beginning of 2021, when the bull run began to rise. 

Total Cryptocurrency Market Cap from November 17, 2018, to November 17, 2022.
Source: https://coinmarketcap.com/charts

Given the current market conditions, macroeconomic factors, and all of the variables, a bull run may occur when inflation begins to fall, the energy crisis begins to resolve, and all countries are at peace. Indeed, no one can predict the future, but the next bull run could occur after the market makes the correction and investors begin investing more in cryptocurrency. Everything in the cryptocurrency market proves that anything is possible, and all investing involves risk; thus, we recommend you conduct your own research before investing. 

How Should You Invest During the Bull Run?

When investing during a bull market, it is always best to recognize the trend early on so that you can begin investing as soon as possible. When the market reaches its peak, you can sell for a profit; as a general rule, buy low and sell high. Remember that during the bull run, the market may take an unexpected turn due to a crisis such as war, pandemic outbreak, or regulatory intervention. Still, if you monitor the market frequently, looking at the charts will help you see the early signs of a bearish trend, in which you may sell your asset before the price starts to fall significantly. 

Final thoughts

Many factors influence the bull and bear crypto markets, and because the cryptocurrency market is more volatile than the stock market, you must trade with caution. 

During a bull run, crypto investors typically buy the dip when the price goes lower and hold on to make good profits when the market rebounds and rises. 

Keeping an eye on previous market patterns of bull and bear trends could help you to analyze the potential future changes that would impact the market. A good habit of constantly checking on the latest news and charts will prepare you for an informed decision before each trade. 

Whether you’re investing in a bull or bear market, keep in mind that there are always risks, and we encourage you to do your own research to make the best decision possible, given the circumstances. 

Disclaimer

Please note that this is not trading advice. We recommend you to carry out your own research before making any trading decisions. This article is for informational purposes only.

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