Understanding Bitcoin (BTC) Bull Runs: A Beginner's Guide
After a harsh crypto winter in 2022, Bitcoin had an explosive start to the year, rallying from $16,000 to over $26,000 in Q1/23 to mark a 60% increase in value year-to-date. While the jury is still out on whether this will trigger a bitcoin bull run that will last the entire year, bitcoin investors are hoping it will.
Read on to learn about bitcoin bull runs and what has triggered them in the past.
What is a bull run?
A bull run, also called a bull market, is a period when general investor confidence is high. It is characterized by rising prices because demand outstrips supply. During this time, the majority of investors are “bullish” — optimistic — that prices will keep on rising. Therefore, they are more willing to buy an asset than sell it.
Investors can benefit from bull runs by buying low and selling high before the bull market turns bearish and prices start to correct again.
Trust Wallet is a non-custodial that enables Bitcoin investors to securely buy and store bitcoin (BTC) directly within the smartphone app. You can also seamlessly swap BTC for other cryptocurrencies to buy low and sell high during the next bull market.
What triggers Bitcoin (BTC) bull runs?
Let’s take a look at what events have historically triggered bitcoin bull markets.
Bitcoin halving
A Bitcoin halving is an event that takes place roughly every four years, slashing miners’ block reward by half. The last Bitcoin halving event was in 2020, when the block reward was cut to 6.25 BTC. During the next Bitcoin halving around April 2024, the block reward will drop again to 3.125 BTC.
The goal of these halving events is to reduce the rate at which new BTC is added into circulation. As the supply reduces over time and demand increases, the price of bitcoin is supposed to go up over time, at least in theory.
Looking at the history of Bitcoin halving events, you can see that they precede bull markets every time. During the first halving in November 2012, BTC was only worth around $12. One year later, bitcoin’s price surpassed the $1,000 mark for the first time in history.
The July 2016 halving preceded one of the most epic bull runs in Bitcoin’s history. At the end of 2017, bitcoin soared very close to $20,000 for the very first time, attracting both admiration and criticism.
Four years later, a similar pattern occurred. After the May 2020 halving, a Bitcoin bull run was triggered, sending BTC to a new high slightly below $70,000 on November 10, 2021.
The chart below shows what happened after the 2020 Bitcoin halving event.
If this pattern continues, bitcoin could reach new highs in 2025 thanks to the upcoming Bitcoin halving event in 2024.
Positive news coverage
Positive news has a way of influencing market sentiment and pushing prices upwards. Such news may be related to new projects, new innovations in the crypto space, and interest from new investors. For instance, a public company buying bitcoin generally generates optimism within the crypto market.
On September 14, 2020, for example, MicroStrategy, a publicly listed company, purchased bitcoin worth $175 million. This news may have influenced market sentiment because prices rose to new highs the following days, according to CoinMarketCap data.
After MicroStrategy’s purchases — the company bought bitcoin several times in Q3 and Q4 2020 — other public companies joined in at the beginning of 2021. For example, Tesla acquired $1.5 billion in bitcoin, generating a lot of buzz throughout mainstream media outlets. On the day this news was announced, February 8, 2021, bitcoin hit a high of $46,203.93. The next day, bitcoin’s highest price was $48,003.72.
Increased adoption
A rise in adoption is a sign that people are optimistic about the future of cryptocurrency and expect to see greater demand for it. When metrics such as the number of new wallets created or the number of transactions increase, prices could begin to rise, triggering a bull market.
The reasoning behind that is that the more people are using a specific crypto network, the more likely it will succeed in the long run. Investors want to position themselves for this potential future success, pushing up pricing by buying up the cryptocurrency.
Investor speculation
Speculation is a major driver of Bitcoin prices. It can move prices up or downward depending on the general market sentiment. When speculators are optimistic that prices will start rising, their excitement and risk appetite increase, sending prices on an upward trend.
A 2020 survey by The Tokenist revealed that familiarity with Bitcoin has significantly risen since 2017. This means the 2017 bull run may have generated a lot of interest because more people wanted to own a piece of BTC in the hopes that another bull run would come along in the future and generate huge profits for them.
This is essentially the definition of speculation.
So, these speculators, who probably HODLed for about three years during the bear market period, influenced the market sentiment the moment they saw signs that another bull run was imminent. Such signs may have been consistently rising prices and a minimal effect on prices when bad news hit the markets.
The Lifespan of a Bitcoin Bull Run: What to Expect
Although Bitcoin experienced a three-month bull run in 2011 when it shot from $1 in April to almost $30 in June, we’ll look at the three well-known bull runs below.
The short-lived bull run
2013 was a big year for bitcoin since it hit the $1,000 mark for the first. Although it opened the year at a low of $13, the digital currency was determined to make history that year, rising past $1,000 in November. The all-time high (ATH) that year took place on December 5 when BTC reached $1,152.73, based on CoinMarketCap data.
The steady rise in prices may have started in mid-October, as per the chart below.
Therefore, you could say this was the point the 2013 bull run really began. But after staying 20% below the ATH for the remainder of December and all of January, February, and March the next year, you can conclude that the bull run was over, and the bear market was underway.
By some indicators, a bear market usually starts when the price of an asset remains 20% below the recent ATH for more than two months. So, the 2013 bull run may have lasted from mid-October to mid-January 2014, which is about three months.
The longest bull run
An uptrend commenced in October 2015, as shown by the green line in the chart below. Prices continued climbing slowly throughout 2016, closing the year around $1,000.
In 2017, the uptrend momentum increased steadily throughout the year until it surged sharply past the $19,000 mark in December. Therefore, this bull run was incredibly long since it lasted slightly over 2 years.
The 1-year bull run
After a long crypto winter that commenced in 2018, bitcoin started showing signs of life again in October 2020. This is where the bull run may have started, reaching a climax about 1 year later on November 10, 2021.
The interest rate hikes by the Federal Reserve, which began in March 2022, may have prevented bitcoin from rallying even further. By then, there were already many signs the bear market had set in.
As we can see, there’s no pattern in the duration of past bull runs since each had a different lifespan. As a result, it is very difficult to predict the exact start of a bull phase and forecast how long a bull run will last.
One of the main factors that can affect a bull run is market sentiment. As long as market sentiment remains optimistic, then a bull run can last and go on for a longer time.
Looking at the 2021 bull run, for example, with interest rate hikes happening the following year, investors started becoming more cautious, shying away from risky assets like bitcoin. As a result, demand for bitcoin dropped, and the price followed suit.
Over the years, the Federal Reserve has introduced several interest rate hikes for various reasons. For instance, in March, June, and December 2017, the Fed increased interest rates without appearing to affect bitcoin’s price. To illustrate, the interest rates were hiked on December 14, yet the next day, December 15, BTC’s price shot past the $19,000 mark.
This shows that the factors that influence bitcoin are changing or have a lagging impact, making it difficult to predict what will happen during the next bull run.
A History of Bitcoin Bull Runs: From 2011 to Today
Finally, let’s take a look at an overview of notable bitcoin bull runs in the past.
The 2011 Bitcoin bull run
The 2011 bull run lasted three months, from April to June, recording a price increase of more than 2,000%. It marked the first time Bitcoin’s price surpassed $10 and $20. That year, Litecoin launched as Bitcoin’s competitor, resulting in a 90% drawdown in BTC’s price.
The previous year, 2010, Laszlo Hanyecz bought two Papa John’s pizzas for 10,000 BTC to promote Bitcoin transactions. 1 bitcoin was less than a dollar at the time. This interesting transaction could have been a contributing factor to BTC hitting $1 the next year.
The 2013 Bitcoin bull run
The 2013 bull run started around mid-October and ended in mid-January 2014, registering a price change of approximately 750%. That year, bitcoin’s market cap surpassed $1 billion for the first time, and the first Bitcoin ATM was rolled out in Vancouver.
The 2017 Bitcoin bull run
The 2017 Bitcoin bull run commenced in October 2015 and ended in December 2017. During this period, Bitcoin enjoyed a price increase of over 5,000%. On December 1, 2017, the CME announced it had received the green light from the Commodity Futures Trading Commission (CFTC) to introduce Bitcoin futures later that month on December 18. About two weeks later, BTC hit a new ATH of almost $20,000.
The 2021 Bitcoin bull run
From October 2020 to November 2021, bitcoin experienced a price surge of more than 480%. One of the notable events that happened during this bull run was Tesla purchasing $1.5 billion in bitcoin in early 2021. This news caused BTC’s price to shoot up by 17%. Bitcoin also got another major win that year in September when El Salvador adopted it as a legal tender.
Conclusion
The history of Bitcoin bull runs appears to follow a pattern where the price shoots up to incredibly new highs the year after the Bitcoin halving event. This gives investors a chance to try and predict when the next bull run is likely to take place, allowing them to make informed investment decisions.
However, relying on this history alone is risky. You should, therefore, conduct your own research before making any investment decisions.
Other than doing thorough research, acquiring the right wallet is also particularly essential. A reliable self-custody wallet like Trust Wallet enables you to buy, hold, and swap your bitcoin securely and with ease.
Here’s how to buy bitcoin with a card directly inside Trust Wallet.
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