What is a bull market?

A bull market is when prices are in a rising trend and are expected to continue. Bull markets take place when the market is confident leading to increased volume and buy orders, resulting in higher prices. Traditionally, bull markets have been defined by price rises of 20% following periods of prices declining, or bear markets. This definition does not fit as well with cryptocurrencies, which can see percentile gains far exceeding 20% even when there isn’t a bull market.

When confidence in the wider economy is high or rising, bull markets typically take place. For example, this can be due to strong GDP performance or low levels of unemployment. This makes investors more confident that prices will continue to rise, leading to more investment and higher prices.

Bull markets get their name from the rising pattern of the financial chart. This is said to take on the shape of a bull with its horns pointing upwards to show rising prices. In contrast, a bear market gets its name from charts looking like a bear with its nose pointing downwards, indicating declining prices.

2021 can be said to have been a bull year for Bitcoin, which saw its price rise over 135% from January to the year’s peak in November. This followed on from a severe decline the previous year in March 2020 when pandemic measures hit the world.

Did you find this useful?
11
0