Due to the increasing popularity of the financial markets, especially the crypto-currency market, you may have heard the phrase “Bull Run”. This phrase comes up often in many articles and even in everyday conversations related to investing. But, what is the Bull Run in reality? In this article, we’re going to explore this concept and share with you everything you need to know about navigating the crypto bull market cycle.
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A bubble occurs when the value of an asset is over-inflated with new investors. Unfortunately, since the market cannot sustain these numbers, over time we see the collapse of financial asset prices. On the other hand, while sometimes a bull market in crypto-currencies can lead to a dangerous bubble, this is not always the case. A market rise can be natural within the fundamental rules of the market.
But when there is a fragile factor that drives prices up knowing that they could collapse at any time, then we are in a case of a bull run. This is an artificial rise in asset prices. This factor can be a hot news, an innovative technology or an influential actor. Indeed, this was the case last March with the appearance and tweets of Tesla CEO Elown Musk, which drove up the prices of Bitcoin and Dogcoin before they later fell back.
However, investors should be wary of bubbles, but have confidence in bull markets with solid, steady and sustainable growth. Bubbles can occur in any financial market and the results are often catastrophic. Setting aside assets in stable locations is a good strategy if you think a bubble situation is imminent.
In fact, during this period, asset prices are not real but overvalued, so they are artificial because they tend to make a comeback. However, if you bought your assets at the attractive price previously, a bull market gives you an excellent opportunity to claim some of that profit.
In the sphere of the financial and cryptocurrency world, Bull Runs are valuable pairs of dice for smart investors. Since the nature of investing is to buy low and make a profit on the way up, it’s easy to see how important a bull market is to investors. Thus, through a market game, the appearance of the downtrend increases the value of the uptrend to investors.
Therefore, the appearance of bull runs in the market allows professional investors to make profit on their trading positions or by selling part of their assets. They are fully aware that the current price level is artificial and therefore could eventually make a comeback.
Identifying the start of a bull market can be difficult, but in general, you will see a lot of optimism around crypto-currencies. More often than not, the overall market would look like it’s slowly rebounding and becoming very healthy, especially after a previous sharp decline. Simply put, when you are facing a bull market or a bull run, you will feel the enthusiasm of people, old players and the entry of new players.
Also, to anticipate a Bull Run, it is advisable to watch the news carefully, especially the mainstream media. Scrutinize what they say about blockchain technologies to the letter, as key news is the point of push. If it’s all doom and gloom, then get ready for more declines. On the other hand, if things are steadily improving, you can expect prices to rise.
Professional investors are always aware that no uptrend can continue indefinitely, which is why they carefully examine all signs of the beginning of a downtrend, such as the formation of a death cross pattern.
The golden rule when operating in the financial markets is to recognize the differences between the beginning of a downtrend and the natural market corrections when discovering the price of an asset. The truth is that when a downtrend begins to form, the chain of sellers increases more than before and buyers believe more in the price decline. It is therefore this pessimistic atmosphere that prevails in the minds of all the players that slows down the speculative bubble in its upward movement in prices through corrections and sales.
It is difficult to give the duration of crypto-currency bull markets. Their trading data is simply more limited due to their newness, and they are very different from traditional financial assets.
However, if we look at bitcoin’s previous highs and lows, we can see that these market cycles can last for several months, or even years in some cases. Much of this depends on market sentiment. Since most assets follow bitcoin, you should start by analyzing its previous highs and lows to get familiar with crypto currency market cycles.
Also, markets move in cycles and no cycle lasts forever. People who think that the bull market will last forever often lose most of their gains out of greed. When it comes to financial markets in general, it’s important to know when to take profits.
If you think the bull market may be coming to an end soon, you need to take precautions. It’s a good idea to put some of your gains into stable assets so that you’re in a better position when the eventual down cycle kicks in.
The exact reasons for the end of a bull market can vary, but the best explanation is pessimism. Some type of trigger, which makes investors nervous. It could be news about crypto-currencies in general or the economy itself. The only way to know when the bull market is ending is to try to identify the signs of decline.
There are many reasons why the price of bitcoin and the crypto market to explode in March 2021. Among the causes causing the bull run are:
The Halving of Bitcoin in 2021
Since the beginning of the pandemic, there has been a rise in the value of certain virtual coins like bitcoin. In fact, this artificial rise was the direct effect of a phenomenon called “halving” in the crypto-sphere. This phenomenon causes the mining supply of new tokens on the market to decrease. As a result, the condition of artificial scarcity led to huge speculations about the rise in the price of bitcoin. Unfortunately, this condition led the entire crypto market into an unprecedented Bull Run in synergy with some explosive news in 2021.
One of the main reasons for the rise of the crypto-currency market in 2021 is the increasing adoption of digital assets by institutions.
Since mid-2020, in the wake of the Covid-19 pandemic and the financial consequences for businesses around the world, institutional investors have been capitalizing on bitcoin’s excellent store-of-value qualities as well as its high growth rate. While publicly traded companies like MicroStrategy and Square have led the way for institutional investment in crypto-currencies, we’ve seen large companies invest significant amounts of money in BTC in 2021.
These include Elon Musk-led electric car maker Tesla, Japanese video game company NEXON, Seetee AS, Norwegian holding company Aker ASA, and Chinese technology company Meitu. As a result, institutional investors, including private and publicly traded companies, hedge funds and even the Ukrainian and Bulgarian governments — hold nearly 8% of the outstanding supply of bitcoins. Moreover, these new entries into the crypto market are overvaluing the market by putting it into a Bull Run.
Furthermore, over the next few years, S&P 500 companies could be in a mad dash to buy and hold bitcoin, especially since they saw Tesla make $101 million in profits by selling some of its BTC in the first quarter of 2021.
Before this year, we didn’t see many major financial players accepting crypto payments. Instead, during the bull run of 2017 and the bear market of 2018, the main trend among businesses was to denigrate bitcoin and call all crypto-currencies a “bubble.” However, that sentiment has seen a major shift this year. Now, even some leading financial institutions and payment companies are experimenting or have already integrated crypto into their ecosystems.
JP Morgan is a perfect example. In September 2017, Jamie Dimon, the CEO of the U.S. investment bank, called bitcoin a fraud, claiming that crypto-currency is “worse than tulip bulbs.” Now, JPM is reportedly planning to launch a Bitcoin fund this summer while projecting that BTC could compete with gold and reach $130K in the long run.
Additionally, payment giant PayPal announced in late 2020 that it was allowing its U.S. customers to buy and sell crypto-currencies. This year, the company shared even better news with the industry by rolling out digital asset payments to 29 million of its merchants.
In addition to PayPal, card processing giants MasterCard and Visa both announced this year that they would integrate crypto-currency payments into their payment networks. Thus, with the evolution of sentiment and the adoption of digital assets by major market players, we believe that the acceptance of crypto-currencies as a payment method by businesses will soon become the norm. Moreover, this norm could also lead to an overvaluation of the market in a Bull run the coming years.
This is because crypto-currency provides financial sovereignty while facilitating peer-to-peer (P2P) transactions without intermediaries or government oversight. Therefore, as consumers become more aware of these benefits, businesses, including those that are staunchly opposed to digital assets, will have no choice but to offer crypto-currency payments to their customers to meet the growing demand.
DeFi is increasingly becoming a trending trend in the crypto-currency space. It has achieved 250% growth in May 2021, representing a figure of over $56 billion. Indeed, DeFi offers users, access to decentralized alternatives to traditional finance solutions, such as lending, borrowing and saving. As a result, the decentralization of banking products and services at the DeFi level will generate a particular craze around cryptos. This, therefore, helped to create an artificial rise in demand and an increase in prices.
Non-fungible tokens (NFTs) have taken the crypto-currency market by storm in 2021.From billionaire investor Mark Cuban to Twitter CEO Jack Dorsey to Microsoft, Rick and Morty, the NBA and K-pop stars, many people and organizations have minted and issued their NFTs on the blockchain this year.
In addition, NFTs are unique and irreplaceable tokens representing digital collectibles, licenses, artwork and even personal data whose authenticity can be easily verified on the blockchain. For these reasons, many have realized the power of NFTs, creating a sudden and significant boom within the crypto-currency market.
It is quite difficult to say when and what the next bull run in the crypto-sphere will be about. However, there are a few things that can be said about it. In 2022, the next bull run could be occasioned by the massive adoption of cryptocurrencies as a means of payment by big companies, crypto ETFs and the boom of metaverse worlds. On the other hand, if more companies come forward and accept digital currencies, they could trigger the next crypto-currency bull market.
Unfortunately, as things stand, a crypto-currency crash seems more likely than a bull market. If governments decide to take action against cryptos, they could fuel a sell-off in the markets. Joe Biden seems concerned about the risks of crypto-currencies. His administration is considering increasing regulatory oversight and taxing crypto-currency transactions to fund his infrastructure bill.
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