A Bull Run in Crypto: Understanding the Excitement and Risks

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A bull run in crypto can be thrilling, but it requires a strategy. Find out how to maximize gains and minimize risks with these smart trading strategies.

A bull run in crypto does not only come with profit; it comes with all the adrenaline needed to make you reconsider your game plan, realign your risk appetite, and navigate through one of the most dynamic markets on Earth.

For generations now, the crypto market has been attributed with volatility, where prices seem to balloon and deflate at a dizzying speed. However, something that a lot of traders and investors keep an eye on is the crypto bull run. You know growth in cryptocurrency prices could be extraordinary, but so could a bull run if managed right. Comprehending a bull run crypto and how to ride it can be the difference between profit and loss, and it is easy to understand why. In this article, we will explain how to squeeze the most returns with the least risk out of a bull run crypto and some strategies on where to profit.

What is a Bull Run Crypto?

A bull run in crypto is an instance of long-term rising rates through a vast market constellation. These runs are often initiated by a spark—market sentiment, new technological innovations, or external circumstances such as regulatory changes—which encourage investors to jump in. With more people starting to invest, the cost of cryptocurrency soars.

The beauty of a bull run crypto is that it attracts both seasoned investors and rookies who want to catch the wave. But needless to say, while these surges feel great, they also come with a risk. Since a crypto bull run can become a bear market at any moment, your strategy should be prepared.

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Reading a Crypto Bull Market

If you can spot a bull run crypto early enough, you can hugely increase your odds of profiting from it. There are multiple signs that a bull market is taking shape:

  • Higher highs and higher lows: A bull market is most commonly defined by persistent price appreciation. Seeing the price regularly print new highs with every retracement also means a bullish run.
  • Higher trading volume: A bull market often sees an increase in buying and selling activity. You will especially notice it with high-market coins, such as Bitcoin or Ethereum. Their activity often signals trends in the market.
  • Bullish market sentiment: Twitter, news sites, and forums will be ablaze with hope. Confidence is a huge driver in a bull run crypto, and positive sentiment encourages more people to dump money into the market.

Bull Run Crypto: How to Trade Smartly

One of the golden rules of a bull run crypto: have a strategy. Otherwise, the siren call of fast profits might morph into crippling losses.

  • Buy and Hold: Easily the simplest and most convenient for long-term investors, buy and hold involves buying crypto as early as possible during the bull run and holding it as its price appreciates. This is most effective with already established currencies, such as Bitcoin and Ethereum, which have comparatively lower volatility compared to smaller, less established currencies or ‘altcoins.’
  • Dollar-Cost Averaging (DCA): If you do not want to risk yourself by making a peak purchase and then regretting it, DCA means investing the same amount of money in cryptocurrency over time, regardless of the price. This approach can help reduce the effect of volatility and ultimately reduce the average cost of the investment over time.
  • Momentum Trading: This is a trend-following strategy. Momentum traders buy a cryptocurrency when the price is going up in the hope that the price will keep rising. The idea is to take a ride in the direction indicated by a momentum indicator like moving averages or the Relative Strength Index (RSI), with a proper entry and exit strategy based on these indicators.
  • Swing Trading: In contrast to momentum trading, swing trading seeks to profit from price action in the shorter term but within the context of a longer-term trend. With a bull run crypto, it usually means buying the dips and selling the rallies, targeting smaller profits many times over the course of the run.
  • Locking in Profits: A wise trader knows how to lock in profits. Funds will then take their gains before the collapse, and setting your take-profit at these prices allows you to do this. If the price keeps rising, this method allows you to keep locking in profits—first 20%, then 40%, etc., up to 60%.
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Risk Management: How the Run-Up in the Bull Can Point You to Cash

A bull run crypto sounds great in terms of potential gains, but it carries risks with it as well. As the market continues to rise, it is so easy to neglect your capital protection.

  • Stop-Loss Orders: Stop-loss orders are orders that will sell your crypto when it reaches a certain price, so you are cutting your losses. In a bull run crypto, when the market flips unexpectedly, stop-losses are there to safeguard your profit.
  • Preventing FOMO: The Fear of Missing Out (FOMO) is a widespread sentiment in the hottest crypto bull runs. However, such quick decisions usually create purchases at above-market rates that might be costly when the market reverses. Stick with your strategy and avoid the FOMO of chasing the height.
  • Portfolio Diversification: It can be tempting to go all-in with your stack during a bull run crypto on coins that are performing well, but portfolio diversification will always help manage risk. The reason behind this is to avoid exposure to unforeseen drops in price by holding a diversified portfolio.
  • Do Not Overleverage: While leverage increases profits, losses are equally amplified. In a bull run crypto, do not overuse leverage and plan risk management carefully.

How to Realize That a Bull Run Has Stopped

Bull run crypto is great, but they never last. Below is the outlook for the end of the bull market:

  • Parabolic Price Increases: More often than not, the price of cryptocurrencies that increase too quickly indicates an unsustainable increase in price.
  • Falling Trading Volumes: If the market price is rising but trading volume is decreasing, this signals a weak and dying market. A rise in price with lower trading volume can indicate the bull run is losing steam.
  • The More Familiar This News Becomes, the Closer the Market Peak Comes: Overhyped media coverage often marks the peak of a bull run, and corrections are due when this happens.
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How to Prepare for the Coming Market Correction

Any bull run will see corrections in the market, so that is expected. It is called a market correction when prices drop 10-20% after a spike. Yet these corrections provide a gift to those who are ready.

  • Take Profits: Shift some of that bull run into stablecoins or fiat. This enables you to secure your profits and prepare for your next opportunity.

 

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