What does Bull- or Bear market mean?

Market cycles are normal in all asset classes. Prices rise for periods (bull market), but they also fall from time to time (bear market). Together, they form a full cycle. This up-and-down pattern applies to shares and to Bitcoin as an asset. Speed and size of moves can differ a lot by market.

What defines a bear market

A bear market is a sustained negative trend. As a rough rule of thumb, a drop of more than 20% from the last high is often used. In more volatile markets like Bitcoin, the threshold can be higher. Bear phases can also start with one large price crash.

Past examples help to illustrate this: In March 2020, the COVID shock triggered a bear market in shares and in Bitcoin.

Bitcoin also saw a long downtrend in 2018 after the record high at the end of 2017.

Historically, Bitcoin moved in a rough four-year rhythm around the halvings. With each halving of the block subsidy (2012, 2016, 2020, 2024), the new supply fell. Often, this was followed by a cycle of accumulation, then a strong uptrend over the next 12–18 months (with notable peaks around 2013, 2017, 2021, 2025) and then a sharp correction of 50–80% and a longer sideways phase. This pattern is an observed relationship, not a strict law of the market.

Why markets crash

Several factors can trigger bear markets:

• Broad economic downturn with rising unemployment, falling consumption, and lower investment.
• Falling risk appetite: investors cut risky positions and look for “safe assets”.
• Loss of confidence in specific asset classes due to news, regulation, or company decisions. For Bitcoin as an asset, sentiment plays an extra role. Negative headlines about regulation or adoption can speed up selling. Falling prices can trigger chain reactions and lead to more selling.

What happens during bear markets

Falling prices often cause domino effects. Margin calls force sales. Portfolios become more defensive. Negative headlines increase. At the same time, opportunities appear for those who bet on falling prices or buy against the trend. But timing is hard. If you get it wrong, your returns suffer.

What defines a bull market

Bull markets mean sustained price increases, optimism, and mostly positive news. In shares, they usually last longer than bear markets and often go together with economic expansion. In US shares, an average bull market has lasted several years with a relatively steady rise.

Bitcoin cycles are often more compressed. Strong rises can happen in a short time, followed by sharper corrections. The dynamic is more global and less tied to any single economy.

How to assess markets correctly

Popular thresholds (for example ±20% from the high/low) are useful guides, but they are not natural laws. Markets differ in volatility, liquidity, and participant mix. If you focus on one number only, you can miss the context: trend length, market breadth, macro data, and liquidity conditions.

Bitcoin also has supply-side specifics. The regular halvings reduce new supply. Many market participants see this as cyclical tailwind: tighter supply meets growing demand. Prices rise until the market adjusts to the new level. Corrections can follow. These explanations are models, not guarantees, but they help to understand the mechanics.

Investment strategies

There are two basic approaches, both have pros and cons.

1. Long-term and steady. You invest regardless of market phase (for example with dollar-cost averaging). You rely on a long-term upward trend. This avoids timing errors but accepts temporary drawdowns. In general, you aim to buy at an “average price”.
2. Active and cyclical. You try to invest less during bull phases and buy more during bear phases to get a lower entry price. This sounds easier than it is, because nobody can predict prices. It can also bring effort and stress.

Final Thoughts

• Bear markets are negative trends and price crashes in an asset.
• Bull markets are upswings that can reach new all-time highs.
• Bitcoin cycles have their own drivers, like halvings and global demand, and often behave differently from shares or other asset classes.