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The difference between a bull market and a bubble

Simply put:

BULL MARKET: natural growth driven by real economics

BUBBLE: unnatural growth driven by an influx of money supply during a bull market

In the context of the current bull run in crypto, it was kickstarted by the Bitcoin halving (reduced supply), followed by institutional adoption (demand). Same with the rise of DeFi, which caused a rise in demand for ETH to pay for gas fees – this is natural growth.

Since the early players have already made money on the big caps, new market entrants want to look for new opportunities. In crypto this translates as buying altcoins (hence alt season always comes after Bitcoin etc, have reached ATH’s).

As alt season progresses, we start to enter bubble territory. This influx of money supply starts to get thrown at “cheap” alts with low market caps resulting in pumps. During peak alt season (like in 2017) you can pretty much buy any coin in the top 100 and it will pump. Most of these coins don’t have the fundamentals to back up their valuations, so it’s completely unnatural growth.

Eventually the bubble pops and money starts to flow out of the market, triggering a bear market.

The crypto market seems to move in 4 years cycles (3 year bull market, 1 year bear market) in line with bitcoins [halvings](https://news.bitcoin.com/between-bitcoin-halvings-bitcoins-price-not-bound-4-year/). That would put us in the last year of this cycle.



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16 Comments

  1. This is a great high level explanation of the current bull market. Bitcoin is still growing with the alts and there’s a great deal of adoption going on not to mention ETH going to POS which could also lead to some real growth instead of a speculative bubble

  2. Very well said! This is the ELI5 most noobs need.

    IMHO: This coming bear market will be everyone’s last real chance to accumulate enough sats to obtain financial independence. HODL strong! And buy every opportunity you can in the next 5 years. Just a friendly reminder that it only takes 0.28 BTC to position yourself in the Top 1% of BTC holders.

  3. I understand why the halving psychologically might kick off a bull run, but it’s not due to the reduced supply caused by the halving itself. 6 blocks an hour is 144 blocks a day. The block reward was reduced by 6.25 coins per block, that’s just 900 BTC a day. A drop in the bucket compared to daily trading volume.

  4. That cycle is likely to change with this new BTC adoption. I’m thinking BTC goes up more, alts crash, then when BTC crashes, alts really suffer. Basically, like 3 years ago, but BTC doesn’t get punished as much as alts.

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