Crypto Bull Runs, explained

The term “Bull Run” is borrowed from the stock trading floors of Wall Street, New York City. Traditionally, it’s characterised by excitement, optimism, and buying frenzy, as prices of assets rapidly increase, and for a sustained period of time, usually ranging between just a few days to a few months.

Add “crypto” to “bull run” and you get something like these price movements in Bitcoin in recent times.

There was the Pandemic Bull Run of 2020 (A), the ETF Bull Run of 2024 (B), and more recently the 100K Bull Run (C) as we enter 2025. These aren’t official names, of course, but what I call them describe pretty much the main themes of what could have driven Bitcoin’s price to unexpected heights.

While I’ve only given you examples of Bitcoin’s bull runs, this applies to other cryptocurrencies as well, and to a much larger degree. For example, during the last November when Bitcoin soared 37% from US$70,200 to US$96,500, Ethereum rose 47% and Dogecoin up to 160%. 

Since Bitcoin is the oldest and most popular crypto in the world, we often study it as an example of a “representational” crypto asset. We also use its price performance as a proxy to that of the whole crypto market, because most assets in the crypto market are correlated to one another.

What causes a Crypto Bull Run?

To understand what causes a crypto bull run, we need to understand this basic economic law — supply and demand. 

On the demand side, when more people want to buy Bitcoin than there are holders willing to sell, prices tend to go up. The opposite is true when there are more holders willing to sell than there are people willing to buy.

The supply side is much simpler. There are currently 19.79 million Bitcoins in circulation today, and every day, around 450 new Bitcoins enter circulation from mining. This rate, 450 BTC/day, is still absolutely tiny compared to the number of already existing Bitcoins in the world.

This means that the rate of change on the demand side is so much more dynamic compared to that on the supply side. As a result, price changes for Bitcoin are often attributed to how many buyers versus how many sellers there are in the market.

Great. So, what makes more people want to buy Bitcoin? In a word, optimism. How this works can vary depending on the investor — whether it’s an individual investor or an institutional investor.

Psychology of individual optimists

I could be wrong, but you are most likely a retail investor (like I am). We are the regular folks with regular sums of money put into crypto every so often. 

We have access to at least the most recent price history for most crypto. We have social media accounts and may often read relevant news about crypto regulations. Maybe we might know someone in our circle who is more knowledgeable about crypto.

That’s probably all the data available to most of us, to hopefully make informed speculations about future prices. If the data seem to point to a much higher future price than today, we become optimists — and we might buy Bitcoin today.

Then, there’s a portion of us who have a bit more resources to invest in on-chain analytics tools. For example, Bitcoin Magazine Pro offers an array of free charts that analyses how many percent of Bitcoin wallets are in profit, meaning they’ve procured some Bitcoin at a cheaper price than their current value. The higher this percentage, the more likely there is for a sell-off.

These tools allow any investor to see other factors of price performance, beyond simply looking at the price. Regardless, if you’ve done your due diligence and researched as extensively as possible, you may still get that feeling that no amount of research can ever be enough.

Psychology of institutional optimists

Institutions are different. They have access to knowledge and resources that give them even a slight advantage over the crypto market. And even if institutions are equipped with only publicly available knowledge, they can at least sift through the noise and pay attention to impactful factors.

For example, they might find correlations between the emerging tech equities market and the crypto market, and the effects of central banking interest rates on those two markets. They might look at inflation data and international trade relations, and look at how these affect economic policies in the past and foreseeable future. 

Institutions generally look at the whole picture, and really think about the risks before rewards. For example, low-risk assets like government bonds may look attractive when their overall yields are favourable. In this case, risk-averse investors would want to put a lot more money into bonds, which means very little will go into crypto.

However, institutions can also look to expose a tiny part of their wealth to the volatility of crypto. It’s just that, most of them would rather not deal with private keys and recovery phrases. 

Instead, they would rather delegate the custody and security tasks to financial institutions, and/or buy shares of their crypto portfolio through traditional frameworks. For example, the availability of Bitcoin ETFs allows even more institutional investors to get into crypto since 2023 — and arguably at a great time too, when Bitcoin was at a third of today’s price.

Institutional investors don’t solely rely on surface-level pieces of information that retail investors have access to. If crypto is adopted further by institutions, we may see less volatility and unexpected bull runs in the future. 

The takeaways

Bull runs in the crypto market are influenced by the activities of buyers and sellers, and this effect is significantly more powerful than the effects of the supply of the cryptocurrencies. Because of this, it’s important to understand the psychology of optimism at two different levels — retail investors and institutional investors.

While retail investors are limited in terms of access to information and money, there are a great number of them, so headline news such as the price performance and social media rumors can indeed move prices in often unpredictable ways.

However, the emergence of Bitcoin ETFs and services that give institutional investors better options to invest in crypto can reduce the current level of volatility, associated by retail investors’ limited perspectives.