Pulliturg: How market trends guide investors

A bull market is one of the most common terms used to describe an upward trend in market prices. Although this term is primarily associated with the cryptocurrency sector, it is also widely used in traditional markets. Essentially, a bull market refers to a strong and prolonged upward trend that leads to significant price increases within a relatively short period.

The Nature and Characteristics of a Bull Market

While trends in traditional markets are often gradual, cryptocurrency markets behave differently: they have lower volume and thus higher volatility. As a result, we regularly see strong bull rallies, where a 40% price increase within 1–2 days is quite normal. In traditional markets, a 20% price rise from the previous low is considered the start of a bull market, but on crypto exchanges, this can happen much faster and more consistently.

A bull market typically develops when investors become optimistic about the future performance of an asset. This positive sentiment creates buying demand, which in turn drives prices upward. The process continues until market enthusiasm begins to wane or selling pressure increases.

Factors That Promote the Formation of a Bull Market

In traditional markets, price declines and increases are linked to economic indicators. A high gross domestic product (GDP) and low unemployment create favorable market conditions that boost investor confidence. These same factors can indirectly influence cryptocurrency markets as well.

However, it should be noted that the crypto sector, being a smaller niche, often behaves independently and is not always directly tied to traditional economic indicators. Cryptocurrency markets are influenced by other factors such as regulatory environment, technological innovations, and market sentiment.

Technical Analysis Tools for Identifying a Bull Market

Although a 20% price increase is considered the start of a bull market, most signals indicating a bull trend are much less obvious. Traders and analysts use various technical analysis tools to identify future trends and weak signals.

Some key indicators include:

• Moving Averages (MAs) – help determine the overall direction
• MACD (Moving Average Convergence Divergence) – detects momentum changes
• Relative Strength Index (RSI) – shows whether the market is overbought or oversold
• On-Balance Volume (OBV) – indicates volume pressure and buying interest

These tools assist traders in confirming that a bull market is not just a short-term fluctuation but a genuine trend.

Bull Market versus Bear Market

The direct opposite of a bull market is a bear market, which occurs when investors are pessimistic. When prices start to decline (a downtrend), market sentiment turns negative. As traders fear further losses, they increase sales, causing prices to fall further. This situation is called capitulation.

Historical data reveal an interesting pattern: over several decades in the United States, there have been roughly equal periods of bull and bear markets. However, the average loss during a bear market is about –35%, while the average gain during a bull market is approximately +104%. These figures demonstrate that bull markets tend to be more profitable for investors and generally last longer than bear markets.

The cycle between bull and bear markets shows how market forces and investor sentiment continually shape price movements. Understanding how these trends form and the signals that precede them is critically important for every trader.