19 August 2022 • 8 min read
Despite the toasty summer temperatures across many parts of the world, the crypto market remains chilly. While some see the latest crypto winter as a buying opportunity, particularly for those who missed out on the final quarter of 2021, others have lost their mettle, allowing fear to goad them into selling off or thinning out their bags.
However, the next crypto bull run is inevitable. It’s not a question of if it will happen, but when it will happen. If you know how markets work, then you know that they move in cycles, and understanding this basic premise about how markets function will keep you warm throughout the coldest (crypto) winter months.
As Confucius famously once said, "Bitcoin's greatest glory is not in never falling, but in rising every time it falls." The man understood many things, including market cycles. As experienced traders will tell you, markets move in cycles, and one of the keys to successful longevity as a trader is to be able to identify market cycles.
A market cycle consists of four phases (accumulation, mark-up, distribution, and mark-down) and understanding the constitutive parts will prevent you from being caught off guard as well as enable you to take advantage of price movements when one phase seques into the next one—the obvious example here being the next bull run.
If you’re interested in learning more about market cycles, then check out Trality’s Masterclass—it’s completely free for Trality users.
If you started investing in 2008, then you enjoyed the longest bull run in market history, which was bookended by the 2008 global financial crisis and the recent COVID-19 pandemic.
What is a bull run or bull market? It’s simply when prices in a market (stocks, crypto, or otherwise) are rising. In their analysis of the stock market over a span of roughly ninety years (1926-2014), the American financial services firm Morningstar, Inc. determined that the average bull market lasted approximately eight-and-a-half years, with a 20% increase from a stock’s low generally signalling the beginning of a bull market.
A bull market, or bull run (the two terms are used interchangeably), often emerges during periods of investor pessimism, making the current crypto bear market ripe for a transition into bull market territory once again. During an actual bull market, confidence in the market is high, with most investors buying, demand outpacing supply, and rising prices.
A textbook case of a crypto bull run occurred in 2021 (with the May 2021 crash duly noted). Crypto prices surged for the better part of the year, with many peaking at all-time highs (ATH) in November 2021. At the time, crypto seemed to be everywhere, with celebrities such as Matt Damon, Reese Witherspoon, Lebron James, Gwyneth Paltrow, and Larry David, among others, hyping crypto since it was so hot.
It’s important to note that bull runs can be both sudden and gradual. There can be a sustained upward slope in prices over a long period of time or a sudden spike in prices (greater than or equal to 20% is considered the general rule of thumb).
What we really mean when talking about previous crypto bull runs is Bitcoin bull runs, since crypto waters still rise and fall depending on how BTC moves. Generally speaking, analysts argue that Bitcoin moves in four-year cycles, with various off-chain factors such as regulatory concerns or geopolitical instability influencing price movements.
When Satoshi Nakamoto gave the world his idea and the technology behind Bitcoin, its value was $0. By 2010, the price had increased to $0.09. By October of 2010, the price went up to $0.10. An 11% growth in less than in a year is impressive, but is obviously far from a bull run.
In 2011, Bitcoin had its first bull run, with its price increasing from $1 to $32—a breathtaking growth of more than 3200%. However, such astonishing numbers were short-lived. By November of 2011, the price of Bitcoin was down to $2. While 2012 was far from a year of drastic bull runs for the crypto market, Bitcoin managed to end the year at $13. On a one-year scale, the growth was significant by any measure—650% (you won’t find that kind of growth in stocks and metals).
By 2013, Bitcoin had touched $1,000 before falling back to $530. Here again, we can see another year-long bull run with growth of 4076% (yes, you read that correctly). No other asset class was growing at a rate even remotely close to this figure. Between 2014 and 2016, though, Bitcoin had entered a bear run with significant price fluctuations. The price of BTC hit $1000 only in May 2017. On 17 December 2017, Bitcoin’s price briefly reached a new all-time high of $19,783.06. Days later, on 22 December 2017, the price of BTC fell below $11,000, a drop of 45% from its peak. Bulls and bears had led to a cryptocurrency bubble.
Nevertheless, Bitcoin continued to silence even its most vocal critics. Post-2020, the value of Bitcoin reached new ATHs (all-time highs), at one point achieving a price of $29,374. In 2022, the price of Bitcoin went up to $64,000, which signalled a massive bull run that has since cooled. At the end of 2021 and into the beginning of 2022, Bitcoin “dipped” as low as $35,000, and countless cryptocurrency memes flooded the space poking fun at BTC’s wild rollercoaster ride of value.
While the overall price of Bitcoin has increased year on year, there have also been massive fluctuations. Nevertheless, there has been growth through thick and thin. Presently, we are witnessing a bear run, but, as you should know by now, markets move in cycles. All bear runs are followed by bull runs, which is precisely what so many Bitcoin maximalists have been saying throughout BTC’s turbulent swings in value.
There are a number of important factors that might cause the next crypto bull run, which we consider below briefly.
Governments remain polarized about cryptocurrencies, with some like China banning them outright, while others such as El Salvador buying the BTC dip to the tune of $15 million. More broadly, in June 2022 the European Union announced its markets in crypto-assets (MiCA), which aims to bring crypto-assets, crypto-assets issuers, and crypto-asset service providers under a regulatory framework for the first time. If regulatory clarity is brought to the cryptosphere, then it could lure investors who have been on the fence over falling foul of compliance.
As various media outlets have reported, the Turkish Lira has lost approximately 47% of its value in the last full year. Inflation in the United States has also increased significantly, edging just below a forty-year high of 8%. Within Europe, certain countries are experiencing record levels of inflation, driven in part by soaring energy prices. Globally, most fiat currencies are battling inflation, which might make more and more people into Bitcoin converts as they seek a hedge against inflation.
For most people, Bitcoin is the face of the cryptocurrency market. But there are tens of thousands of other cryptocurrencies in existence, and the number is only expected to increase. If altcoins can make it big among investors, the overall crypto market can enter a bull run, which could very well be triggered by specialized altcoins that represent specific projects, solve specific problems, or are simply greener and more energy efficient cryptocurrencies. The next crypto bull run could even result from a surge of interest in an altcoin such as Cardano, which many tout as the next Ethereum killer.
Another important factor, particularly when considering BTC, is halving. Bitcoin halving is a process through which the production of new Bitcoins is made more difficult. As a result, fewer Bitcoins are being mined, and history shows that after every halving there has been a spike in Bitcoin prices. Some such as Du Jun, co-founder of cryptocurrency exchange Huobi, argue that the next Bitcoin bull run won’t occur until 2024, when the next Bitcoin halving will take place.
Wouldn’t we all like to be able to predict the next bull run! If you’re Vitalik Buterin, the founder of the Ethereum network, bear runs are indeed good for cryptocurrencies, as they give developers the chance to work on the underlying technology since there is less short-term speculative attention.
Widespread adoption may fuel the next crypto bull run, as the corresponding development of a supporting Bitcoin infrastructure might facilitate the ease and use of crypto (a similar dynamic is at work with electric cars and the critical infrastructure needed to charge them). The more users and use cases that BTC has, the more valuable it becomes. In addition to consumer confidence, a willingness on the part of investors to put their money in financial offerings such as Bitcoin EFTs could contribute to the next crypto bull run.
Whichever factor (or combination of factors) will lead to the return of the crypto bull market, the coins themselves will be behind the surge. Let’s take a brief look at some of the most promising ones.
Various factors come into play when considering how cryptocurrencies gain value. From good old fashioned supply and demand as well as competition to technological developments and even things like celebrity endorsements, the price and value of crypto (just like traditional assets) are tethered to a range of external factors. Social and political variables also impact how investors buy or sell, with recent geopolitical instability being an obvious example.
When thinking about which cryptocurrencies will go up in 2022, we also have to consider the role of a few key investors. Typically referred to as “whales,” these investors possess a disproportionately large holding of a particular cryptocurrency relative to other investors, making them capable of triggering a bull run. For example, MicroStrategy holds around 121,044 bitcoins, and a sell off would result in a surge in supply and therefore a bull run. In fact, Bloomberg speculates that this is exactly what happened in 2017, when a lone whale fueled a surge in the price of BTC.
So, which crypto will explode in 2022? Which crypto will fuel the next bull run? Bitcoin (BTC) and Ethereum (ETC) are safe bets, especially Ethereum given its long-awaited 2.0 upgrade. Altcoins such as Cardano (ADA), Solana (SOL), and Uniswap (Uni) are frequently mentioned, as is Dencentraland (MANA), among others.
With so much information currently available, there are many ways to find new crypto coins. And with estimates ranging from 10,000 to 19,000 cryptocurrencies currently in existence, there are many undervalued coins. Finding the best cryptocurrencies in which to invest in 2022 can be a challenging task, but it’s not an impossible one.
In many respects, bull and bear markets are irrelevant to seasoned traders, who have little interest in chasing trends, money, all-time highs, or performance metrics. Rather, the smart trader is one who manages to set clear and realistic expectations, build and optimise an effective automated trading system, and keep a clear eye on the future of cryptocurrencies.
Moreover, experienced traders rest certain in their knowledge that markets move in cycles. What goes up will inevitably go back down and vice versa. When armed with the right knowledge, experience, and trading tools such as crypto trading bots, the seasoned crypto trader will be well-equipped to weather bear markets and profit from bullish ones.
Our advice? Hang in there and use the downturn in the market to brush up on your trading knowledge and skills. Just as spring follows winter, so too will the crypto bull market follow the current crypto winter.
It’s only a matter of time.