What Are Bull and Bear Markets?

What defines each market?

The 20% rule comes from stock markets: a fall of 20% or more from a recent peak is a bear market; a rise of 20%+ off a bottom is a bull market. In crypto the numbers run much larger — Bitcoin’s four major bears (2011–12, 2014–15, 2018, 2022) each took prices down roughly 75–85%, and every one was followed by a new all-time high within a few years. Past cycles are not a promise of future ones, but the shape of the cycle — euphoria, peak, panic, boredom, slow recovery — has repeated four times.

The phases have recognizable signatures. A late bull smells like certainty: taxi drivers giving portfolio advice, “next Bitcoin” pitches in every group chat, new coins 100x-ing weekly. An early bear smells like denial — “great time to buy the dip” — followed by anger, then the long boredom of the crypto winter, when nothing moves and nobody cares. That boredom, not the crash, is historically where durable portfolios get built.

How should you behave in a bull market?

Bulls are when it’s hardest to be careful, because everyone getting rich around you seems to have taken no risk. The discipline: decide your position size before prices rise, write down your plan, and distrust any strategy that only works if prices keep climbing. Concretely: if your plan says 70% Bitcoin and Ethereum, 30% altcoins, a bull market that floats your altcoins to 55% of the portfolio is telling you to rebalance, not to celebrate — trimming winners back to plan is how paper gains become real ones.

This is also when scams peak. Fake projects, paid influencer pumps, and “guaranteed APY” platforms do their best business while money is loose, so the same screening discipline you’d use in any market matters three times as much when everyone around you has stopped using it.

How should you behave in a bear market?

Bears are when portfolios are built, even though it feels awful. Prices are lower, hype is gone, and the projects that survive are revealing themselves — in 2018–2019’s winter the projects that kept shipping and kept users are largely the ones that defined the next decade. A beginner’s realistic bear-market plan has three parts: keep learning the fundamentals while tuition (in market terms) is cheap; keep any existing positions sized to what you can hold through the bottom, which is a decision you make before the bottom; and resist the urge to sell everything at the point of maximum fear — which, historically, has been the worst possible moment.

And do nothing recklessly: bears are also when idle cash burns a hole in pockets and “it can’t go much lower” claims sound convincing. It can. The plan survives contact with the bear market; the improvisation doesn’t.

The four phases of a crypto cycle

Watching for phases is more useful than watching for tops and bottoms, because phases are identifiable in real time and exact turning points are not:

1. Accumulation (bear’s end). Prices flat and unloved, volume thin, headlines moved on. This is when patient money builds positions and most people’s portfolios are in cash out of boredom.
2. Markup (bull). Prices grind up, then surge; new investors arrive in rising numbers; altcoins outperform; euphoria builds in the final third. This is where most lifetime gains and most beginner mistakes are made.
3. Distribution (the top zone). Price stalls at high levels on heavy churn — strong hands selling to euphoric new hands. It never feels like a top; it feels like consolidation before more upside.
4. Decline (bear). Lower highs, failed rallies, widening despair, then the long boredom of winter — which, for planning purposes, is where the next accumulation quietly begins.

The uncomfortable symmetry: each phase feels endless while you’re in it and obvious only in hindsight. That’s exactly why the actions that work — fixed schedules, pre-set sizes, rebalancing rules — are the ones that ignore which phase it feels like.