What Is a Bull Market?
By definition, a bull market is the state of a financial market in which asset prices are rising or expected to rise. In traditional finance (TradFi), the term ‘bull market’ is believed to have originated from a bull’s fighting style of thrusting its horns in an upward motion. Traders have since used this term to describe the overall market sentiment that exhibits a similar pattern — an uptrending price trajectory.
What Causes a Bull Market?
The driving factors behind a bull market are the growth of an economy, such as the increase in a country’s gross domestic product (GDP), a growing employment rate, or low interest rates. However, apart from these quantifiable metrics, market sentiment — the overall perception of the financial market — also plays a huge impact on the psychology of traders in certain market conditions.
The bull market cycle is rather simple in the bigger picture: When these metrics seem favourable, it leads traders to buy. As more traders demand these finite assets, the prices increase.
Bull Market Indicators:
- Strong GDP
- High employment rates
- Strong demand for assets
- Positive market sentiment
- General interest in cryptocurrency in the mainstream media