A Bull Run is a term used to describe a generalized price increase of assets on a market. The term is often used when an asset increases its value by 20 % or more for an extended period of time.
Navigating the Bull Run
A Bull Run is the opposite of a Bear Market, which is when assets on a market start decreasing their price by 20 % or more.
There have been many Bull Runs in history. In the crypto market, there was one as recently as 2019, and another one in 2021.
- Increases the value for holders
- It creates FOMO that traps a lot of people in pump and dump scams
- It creates FOMO that traps a lot of people into buying an overpriced asset (due to speculators)
In conclusion, a Bull Run could be a unique opportunity for holders, but you should always be careful and pay attention to other aspects. A price increase is not enough reason to buy any asset or cryptocurrency.
Even for speculators, it is not usually a good idea to buy during a Bull Run. A Bear market is probably the best moment to buy.
It is also important to understand which one of the following three points is the cause of the Bull Run:
- Real increase in value after an important event
- Pump and dump scams
- Increased speculation
If it is the first, then it could be a good idea to buy the asset, because it will probably not decrease in value again for a long time.
Every time there is a Bull Run, it is very important to consider that pump and dump scams may be the cause. In a pump and dump scam, holders of an asset start spreading positive comments based on false information to increase demand, causing a price increase. Then, they sell all their assets at a profit and the price tanks.
But this does not mean that pump and dumps are always the cause of a Bull Run. Sometimes, it could be a consequence of the real value of an asset increasing, caused by an important event. For example, if every government decides to make crypto assets legal tender, there would likely be a Bull Run.
In other cases, the cause could be very low interest rates, which would allow speculators to borrow a lot of money to invest.
During a Bull Run, it is always better to resist FOMO. The best practice is to invest in assets after enough research, and ignoring short-term price fluctuations. Speculation is not safe and in the case of cryptocurrencies, speculation is not the best way forward. In fact, the point of cryptocurrencies is to provide an alternative payment method and / or store of value.
In terms of speculation, a Bear market is probably the best moment to invest, because a Bull Run generally indicates that it is already too late to buy.