What Is a Bull Run?

A bull run is a period characterized by sustained price increases, surging momentum, and optimistic market sentiment.

Oct 20, 2024 at 10:00 pm

1. Definition:
   A bull run is a period of sustained price increases in a financial market, such as the stock market or cryptocurrency market. It is characterized by rising asset values, investor optimism, and a general sense of euphoria.

2. Characteristics:

   • Extended period of positive price momentum
   • High trading volume and liquidity
   • Investor confidence and optimism
   • New highs being reached on a regular basis
   • Speculation and risk-taking

3. Causes:

   • Strong economic fundamentals (e.g., low unemployment, high corporate earnings)
   • Positive market sentiment (e.g., news stories, analyst reports)
   • Increased liquidity due to central bank policies or fiscal stimulus
   • Technological advancements and innovation
   • External factors (e.g., geopolitical events, currency fluctuations)

4. Phases of a Bull Run:

   • Early Stage: Prices begin to rise gradually as investors become more optimistic.
   • Mid-Stage: Momentum builds, and prices surge higher rapidly.
   • Late Stage: Speculative buying and excessive risk-taking become prevalent, often leading to unsustainable valuations.
   • Peak: Asset prices reach their highest point, often followed by a sharp correction.

5. Signs of a Bull Run:

   • Consecutive green candlesticks on price charts
   • Rising moving averages
   • New high-water marks in indices and individual stocks
   • Increasing trading activity and interest from new investors
   • Positive economic indicators and industry news

6. Examples of Bull Runs:

   • Dot-com bubble (1995-2000): Internet stocks experienced exponential growth
   • Bitcoin bull run (2017-2018): The value of Bitcoin increased by over 1,500%
   • U.S. stock market (2020-2022): A post-pandemic recovery led to record highs