In an industry that has been built on excitement there is no other period of time that brings more excitement to the cryptocurrency industry than during a bull run.
Throughout the life of Bitcoin and other cryptocurrencies, there have been numerous previous bull runs, with each one following a similar pattern of extremely high price growth and profitability for anybody that is investing into cryptocurrencies, and a higher than average amount of volatility in the market.
With the lead up to the next Bitcoin halving now on the way, we are taking a look at what the next crypto bull run could have in store for us, and when we can expect the next one to begin.
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We are taking a look at what cryptocurrency actually is to begin with, including why the price of Bitcoin and other cryptocurrencies keep on increasing, before taking a look at what Bitcoin bull runs actually are including why they matter so much to cryptocurrency traders, before looking at the best places to trade during a bull run, and finishing up with whether or not it is better to trade or invest in bull runs and what the risks and advantages are.
What is Cryptocurrency?
Why do Cryptocurrencies Keep Growing in Size?
Perhaps the one fact that draws in so many new cryptocurrency traders when they first learn about digital currencies is the dramatic growth in the price of Bitcoin over the past 10 years.
Although today a single Bitcoin is worth thousands of dollars, in the early stages of the life of Bitcoin during 2009 and 2010, the price of a single coin was a fraction of a dollar, and thousands of Bitcoins at a time were being traded between the earliest Bitcoin users.
A mystery for a lot of people is why Bitcoin has continually kept increasing in price over the last decade, and as well as why all other cryptocurrencies seem to follow the same pattern.
The answer to this question is intrinsically tied to another question that seems to be asked alot by those new to crypto which is why Bitcoin has value at all.
The answer to the both of these questions is that the value of cryptocurrencies are the combination of the number of users within the network and the value that each user can get from using the network which is not available prior to adoption.
What this means is that as the number of cryptocurrency users has grown, the overall value of the total network of cryptocurrency users has also grown in proportion to the number of people flooding into the cryptocurrency industry.
How do Cryptocurrencies Work?
In order to understand why cryptocurrencies have value, another aspect that is important to understand along with the concept of the growth of the network relates to the growth of the value of cryptocurrency.
The second principle is the revolutionary nature of the technology that underpins most cryptocurrencies, known as blockchain.
Blockchain technology was created at the same time that Bitcoin was released to the world in 2008, and as well as being used in a vast majority of cryptocurrencies that have been created, blockchain is also seeing widespread use and exploration within a number of different industries and for a number of different applications.
Blockchain technology simultaneously solves a cluster of complicated computational, mathematics, and economic problems which had plagued those that attempted to create successful digital currencies prior to Bitcoin.
Primarily, Blockchain revolves around the concept of decentralizing the control of the network and democratizing the way in which value and rewards are assigned within the network.
Unlike the traditional banking system where a central bank will make all the governance decisions about the monetary supply of a currency, blockchain-based cryptocurrencies rely on algorithms and mathematics in order for the system to autonomously decide how much of a cryptoasset should be created, who it should be dispensed to, and how to react to different changes in the economic state of the network.
Will Cryptocurrencies Always Keep Growing in Value?
It’s of course much easier to look at the past then it is to predict the future, and no matter how much data that we already have built over a relatively short space of time relating to cryptocurrencies, it is of course very difficult to predict what the future price patterns of cryptocurrency will be, especially when we look at the long-term.
Saying this, we can use logic to understand that the mechanisms within a blockchain that have been built into Bitcoin have a continual upwards pressure on price over time, with that being short-to-medium-term dips in price, but with that being a clear long-term upward trend which has been followed since the creation of Bitcoin.
This is because the Bitcoin blockchain goes through a pattern of halving the supply that is provided each day, and this happens every four years.
Because of this mechanism, and because at least until today we have seen the cryptocurrency market follow the trends of Bitcoin closely, it would be fair to predict that within the coming years that the price of cryptocurrency it will almost certainly continue to increase, with that also being a potential that this could last for decades to come.
What are Bull Runs?
What is a Cryptocurrency Bull Run?
When we look back over the price action of Bitcoin since it’s creation and launch in 2009, we can see that there have been distant periods of upwards price action followed by periods of downward price action.
Typically the periods of downloads price action are known as bear markets, and the periods of upwards price action are known as bull runs.
Bull runs continue for a prolonged period of time, typically between 1 to 2 years, where the price of Bitcoin and other cryptocurrencies consistently increases to a point where it reaches a new all-time high, and then commences a new bear market following this.
These are periods where large numbers of new people flood into the market, and as more new users enter and invest into cryptocurrencies, this creates a feedback loop drawing in more people in.
Why do Crypto Traders Care so Much About Bull Runs?
Cryptocurrency traders and investors care a lot about bull runs because these are the primary periods of time where reliable profit can be generated in the markets.
Not only is profit possible during bull runs, it is guaranteed as long as there is enough of a period of time between the purchase and sale of a cryptocurrency.
As well as this, not only is profit available during these periods, but historically substantial profits of tens, hundreds or thousands of percent ROIs are available.
Historically as well, it has been fairly easy to spot when a new bull run is underway, considering that the telltale sign is prolonged periods of months of the price gradually increasing with an exponential curve beginning to form.
When was the Last Crypto Bull Run?
The last Bitcoin bull run peaked at the end of 2017, after beginning in late 2016.
During this period, the price of Bitcoin and almost all of the cryptocurrencies increased substantially, with Bitcoin ending at a new all-time high of almost $20,000 per coin in December 2017.
Although there have been previous bull runs in 2013 and earlier, this one was significant in that it led to widespread mainstream exposure for cryptocurrencies, and saw an unprecedented number of new retail traders flooding into the market.
The last run in 2017 was undoubtedly a pivotal point in the life of cryptocurrency, with this heralding not only an expansion and maturation of the cryptocurrency industry that had previously been unseen, but also the culmination of investment coming into the cryptocurrency market from the institutional investors in the traditional financial market.
What we can expect to see for the next crypto bull run is a further expansion of these points, being that mainstream exposure will be even more pronounced, and that we can expect to see a tidal wave of institutional money flowing from traditional markets into the cryptocurrency market.
Where are the Best Places to Trading in the Next Bull Run?
PrimeXBT is one of the world’s leading and most prominent cryptocurrency and traditional asset margin trading platforms, and today has built a reputation for providing a wide range of assets across many different asset classes, as well as some of the most unique and powerful tools and features available on the market.
Perhaps most importantly during a bull run, PrimeXBT’s tools and functionality are professionally made, and consists of an industry-grade trading engine and intuitive user interface that provides both beginners and experienced traders with the ability to engage with markets profitably.
PrimeXBT’s trading engine is robust and can execute up to 12,000 trades per second, while the platform itself is secure and uses bank-grade security in order to protect the funds of users.
Newer traders that would like to increase the likelihood of being able to generate profit by selecting the right assets to buy and invest into during the next bull run, are able to use PrimeXBT’s unique proprietary peer-to-peer fund management Covesting module to do so.
This unique tool allows users to create funds and to provably display their ability to generate profitable trades with full transparency, while simultaneously allowing new traders to be able to reduce their risk by investing into these funds for a small fee.
As well as being one of the premiere trading platforms within the cryptocurrency industry, PrimeXBT also provides the lowest fees of any top-tier trading platform with a low flat rate of 0.05% across all trades.
Kraken is an older trading platform that was launched by two security analysts that were brought in to assess the damage done during the collapse of the Mt. Gox exchange in 2014.
Being that during a ball run the trade volume at trading platforms typically increases dramatically, Kraken is a good selection considering that over the past few years they have dedicated a large amount of resources to upgrading their trading engine and infrastructure.
This was because Kraken had a reputation throughout the last bull run in 2017 for having a flawed and weak trading engine that would glitch and collapse regularly throughout high volumes of trading.
However this issue has hopefully been largely resolved with Kraken rebuilding their trading engine to be robust and able to deal with high volumes.
Apart from this issue, Kraken is a relatively easy to use training platform that is suitable for all user types, and would be a good candidate during the next bull run for anybody looking to find a solid trading platform.
Is it Better to Trade or Invest in Bull Runs?
Pros of Crypto Trading During Bull Runs
Bull runs can be categorized as periods of time where the tendency of the price of cryptocurrencies is to increase consistently, often over periods of weeks or months at a time without any significant drop in price.
Because of this, and because of the nature of profitable trading being the ability to monopolize on upwards and downwards movements in price, it could seem as though trading bull runs would actually be disadvantageous compared to just holding.
However this is not accurate being that although the main long-term trend is upwards during the bull run, there are still plenty of periods of consolidation, and reverses in trend over the short-term.
What this means is that often the rate of the increase in price during a ball run will overshoot the average and spike upwards, leading to a climb upwards which deviates away from mean, and a subsequent crash in the short-term after the cryptocurrency is overbought.
This in itself presents a great opportunity to trade throughout the bull run, with deviations both above and below the main trajectory of the trend allowing savvy traders to generate high profits on the way up.
Pros of Crypto Investing During Bull Runs
While there are opportunities for cryptocurrency traders during a bull run, it is obvious as a cryptocurrency investor that planning to buy and hold for the medium-to-long time during a ball run presents perhaps the best opportunity available.
Bull runs are in fact exactly what cryptocurrency investors are waiting for, being that they present an opportunity to purchase at any point along the run with ensured profit at all future points.
Particularly, the main advantage of investing over trading during ball runs is that investors do not take the risk of missing out on higher profits by trying to trade the trend, and potentially selling out just prior to large increases in price which will inevitably catch some traders.
In other conditions including flat trading and in bear markets, the primary risk for most traders is to buy cryptocurrencies and then to be holding him as the price drops, leading to losses of real-world fiat value.
The converse is true during bull runs, with the greatest threat by far actually being to miss out on profits as opposed to incurring losses
What are the Risks and Advantages of Making Money During a Bull Run?
Major Risk During a Bull Run
As we touched upon in the previous section, during a ball run there is a substantial risk of missing out on profits, and this is arguably the greatest risk during these kinds of upwards trends.
While investors may have it easy by being able to buy and hold an asset long-term irrespective of the short term fluctuations in price, traders are particularly exposed to the risk of being caught just prior to large pumps in price which effectively strand a lot of traders who wait for the price to to return back to the initial level, which never manifests.
Because of this it is important to properly assess the progress of the bull run, and to analyze the situation in order to determine the best strategy possible.
This may focus mainly on either investing or trading, however it should be a decision that is based largely upon the risk of missing out on profit that you are willing to incur, matched against the desired level of profit.
Advantages of Making Money During a Bull Run
The greatest advantage of generating profit during a bull run is that the only challenge in the process is attempting to accurately figure out when the run will end in order to avoid being caught.
While it is easier said than done, being able to understand when the energy of a bull run has reverted, and when the trend is about to change direction and lead to a bear market, is one of the most important skills to be able to have during any bull run as a trader.
During the last major Bitcoin bull run in 2017, those traders that were able to spot the telltale signs of a reversion were able to exit at the optimal time, collecting maximal profits whilst avoiding loss.
These telltale signs include a wide range of indicators that indicate that the cryptocurrency market is overboard, as well as looking for the double top trading pattern, which often indicates the end of an upward trend and the beginning of a new downloads trend.
Where are We Now, and When Might the Next All Time High Be?
Where are we Now?
Bitcoin and cryptocurrency in general follows a 4-yearly cycle where roughly once every 4 years there is a halving of the daily reward that is given to Bitcoin miners, and this constriction of the supply has a knock on effect of heralding the beginnings of the next cryptocurrency bull run.
At the time of writing we are less than a month away from 2020’s Bitcoin halving, and if everything progresses as it has done with both of the previous two Bitcoin halvings that would indicate that we are at a pivotal point in the price history of Bitcoin once again.
Over the coming months we could expect to see a slow progression away from the recent lows, with Bitcoin gradually climbing and bringing the rest of the cryptocurrency up with it.
This may well be a good low point to enter the market in preparation for a bull run that may culminate around the end of 2021 and will continue for the next one and a half years.
When Might the Next All Time High be?
As we look at the patterns of the previous 2 halvings and subsequent bull runs, we see that after each halving there is roughly a period of six months of relative calm, followed by about 12 to 18 months of a pronounced bull run after that.
What this would mean is that with the halving coming up in another month, that we could see the beginnings of an 18 months lead up to a new all time high at the end of 2021 which will be substantially higher than the current high of $20,000.
While this is certainly not a sure thing, both of the previous halvings have followed this pattern, and this is predicted to be the outcome of the coming 2 years by a wide number of analysts and pundits in the cryptocurrency industry.
In Summary: Preparing for the Next Crypto Bull Run
Cryptocurrency bull runs come around only once every 4 years, however it is by far the most opportune point to be trading cryptocurrency, with a substantially higher likelihood of generating profit than at any other point.
Saying this, that is also a wide range of risks, but these risks can be mitigated by selecting training platforms that suit the conditions of a ball run, and that are robust and well made.
Because of this, it is worth taking a look at the platforms we have mentioned above, which are both robust and resilient to high levels of trade volume and rapid influxes of liquidity.
What is unsure exactly is when the next bull run will begin, however it is almost certain that we are not that far away from seeing a new bull run forming, and that it is important to be prepared at this point in order to profit from the unprecedented rewards that are available during this period.
Preparing for the Next Crypto Bull Run: The Definitive Guide  was originally published in Data Driven Investor on Medium, where people are continuing the conversation by highlighting and responding to this story.