A bull market is a period of time in financial markets when the price of an asset or security rises continuously. The term “bull market” is most often used to refer to the stock market but can be applied to anything that is traded, such as bonds, real estate, currencies, and commodities. The commonly accepted definition of a bull market is when stock prices rise by 20%. The opposite of a bull market is a bear market, when prices trend downward.
The Bull Market unfolds through 4 distinct phases.
We’re currently on the cusp of Stage 1. Let’s take a practical look at how to navigate this market cycle wisely, so you don’t miss out on opportunities to secure your financial future.
Here’s what we’re going to cover:
- Practical strategies for each stage of the bull market.
- Smart moves to maximize your earnings.
- Valuable insights to steer clear of common pitfalls.
Stage 1: Accumulation
We’ve been in this phase for about a year now. Following the Terra crash, the FTX dip, and concerns about the stability of USDC, the market hit rock bottom.
The worst is likely behind us (unless Binance/Tether mishandles the situation). Prices have settled, and major news hardly stirs the market, like when PayPal introduced a stablecoin, for example. Currently, there’s not much new money flowing in. Volatility is low, and it’s mainly a small group of about 500 enthusiasts vying for the next big trend.
This phase is about laying the groundwork. Strategically position your assets for future moves. Plant the seeds now and reap the rewards when the bull market arrives.
- Invest in promising projects.
Look for projects with good potential for growth in the upcoming bull market. Choose ones with the right product-market fit, competitive edges, a solid team, a clear roadmap, and strong financial foundations.
- Keep some resources in reserve.
It might be tempting to go all in on well-established projects that have dropped significantly from their peak. However, remember that many of the future winners are yet to emerge. People often prefer to get in early on something entirely new.
- Avoid excessive trading.
Don’t put your progress at risk by making impulsive moves out of boredom or chasing the next meme coin. Prioritize your financial stability over chasing quick wins. Be patient and wait for the right opportunities.
- Enhance your knowledge.
The bull market isn’t the time to start learning; it’s the time to act. Use this phase to learn, so you don’t end up struggling to understand new developments during the bull market.
- Keep an eye on liquidity trends.
Watch how much money is flowing into centralized exchanges (CEX). Observe stablecoin usage. Track the growth of Total Value Locked (TVL) in DeFi. These trends provide insights into the market’s dynamics.
Stage 2: Early Bull
Prices start rising, and pessimists find themselves in disbelief. Every couple of months, skeptics predict that BTC will soon drop to $12,000.
Don’t let skepticism hold you back. Lingering bear market memories can limit your profit potential. Ironically, in the early stages of the bull market, you should embrace calculated risks before the crowd joins in.
What Can Fuel the Bull Market?
- Major developments, like the approval of BTC or ETH ETFs, or a country adopting BTC as a legal payment method.
- The BTC halving is approaching in 2024. While history isn’t a crystal ball, collective belief can have a big impact.
- New paradigms. Previous cycles introduced DeFi and NFTs. What will be the hot trend this time? GambleFi? TelegramBots? A resurgence of NFTs? GameFi? RWAs? There will undoubtedly be sectors we can’t even imagine yet.
- Macro changes. If the Fed changes its policies and stops raising interest rates, more money could flow into the market. Regulatory changes could create a more crypto-friendly environment in the US and elsewhere.
- Reducing barriers. Onboarding newcomers into the crypto world is still a challenge. Better wallets, user-friendly dApps, and more accessible platforms are on the horizon.
- East Asian influence. Crypto Twitter often focuses heavily on the US, but we shouldn’t underestimate the impact of Korean fans and the growing trend of crypto in Hong Kong.
All it takes is one significant event to set off a chain reaction.
Some risk-takers achieve tremendous success, significantly improving their financial situation. They upgrade their lifestyles and eagerly share their stories. Over time, their success stories influence their social circles.
- Let go of underperforming assets and invest in winners.
Don’t get too emotionally attached to your assets. A project that has already grown fivefold might have room for tenfold growth. Focus on metrics, momentum, and sentiment. Be decisive when it comes to underperforming assets.
- Take profits along the way.
Trying to perfectly time the peak is a futile effort. Don’t aim to squeeze every last cent from a trade. Set a systematic approach for taking profits and stick to it.
- Be cautious about taking excessive risks.
Some start using leverage, tapping into home equity or retirement savings, or selling BTC/ETH to chase speculative coins. It’s okay to take risks, but don’t let recklessness cloud your judgment.
- Keep it simple.
Exceptional projects can have weak fundamentals. Tokenomics might be less than ideal. But remember, prices rise when others buy in. Complex projects may deter potential investors. Keep it straightforward.
- Follow influential figures.
They know how to increase token value and manipulate emotions. Keep in mind that these leaders often fade. However, you can join their journey early and exit before any potential downfall or avoid them altogether.
- Don’t ignore regular people.
It’s easy to get caught up in the DeFi Crypto Twitter echo chamber, where discussions revolve around complex terms. Engage with ordinary folks on platforms like Reddit and YouTube comments.
- Focus your efforts.
Specialize in a few sectors. Trying to keep up with the entire market can be overwhelming. It’s okay to miss some opportunities rather than jumping in late and becoming a source of liquidity.
Stage 3: Bull Market Peak
Now we’re in the full swing of Stage 3 out of 4.
The bull market becomes a feeding frenzy. As prices soar, FOMO kicks in. Positive feedback keeps pushing prices higher.
Sudden surges are commonplace. A small investment in a speculative coin can yield life-changing profits. Crypto conversations are everywhere, from getting a haircut to taking an Uber ride. FOMO and euphoria dictate the market. The idea of an endless party takes over, and rational thinking takes a back seat.
People leave their jobs to become full-time crypto traders. Some even sell their homes to jump into crypto investments.
Here are potential signs of the peak:
- Mainstream media shifts its focus to the crypto world. We start hearing stories about people looking for hard drives with 8,000 bitcoins or trading 10,000 bitcoins for two pizzas.
- Financial YouTubers, like MeetKevin, Max Maher, and Graham Stephen, flood their channels with over three crypto videos daily.
- Renowned brands like Pepsi and McDonald’s casually mention crypto to stay relevant. Mainstream celebrities seek profits through sponsorships or by launching their NFT collections.
- Self-promotion reaches new heights. People with Rolex watches flood your social media feed, and new cars are everywhere. If your Twitter feed is overflowing with self-promotion, it’s a sign to be cautious.
The prevailing sentiment is that this time is different. It’s essential to resist impulsive behavior.
In this phase, your primary focus should be to plan your exit strategy. Remember that the celebration won’t last indefinitely. Take some profits. Your future self will appreciate your caution. If you don’t secure profits, the market will likely reclaim them.
Stage 4: Decline
The rise might be followed by a fall. The bullish market peak has likely arrived. The question now is whether it’s a true peak or if there’s a “super cycle” ahead.
They’ll try to convince you that this time is different, and we’ve finally gained mainstream recognition. Watch out for talk about supercycles, theories of Bitcoin extensions, or artificially created charts. Some might claim that this cycle will last a few more years!
Keep in mind that everyone has a financial interest in extending the euphoria. The goal is to direct more funds toward riskier coins.
Amid this, you’ll see glimmers of promise and optimism. When Bitcoin reached its peak in November 2021, the following activities included the OHM fork, FTM/Solidly, and Luna.
As prices decline, pessimists who missed the two-year bullish cycle and the chance for life-changing wealth start emerging.