How this Bitcoin bull market tracks to other major price rallies

Bitcoin has pressed on with its price rally, and if you believe traditional market math, another bull run has long been confirmed.

The price of BTC briefly cleared $42,000 Monday morning — up nearly one-fifth over the past month and by 150% over the year to date, about on par with Meta but trailing Nvidia.

Bitcoin is now at levels not seen since about a month before Terra collapsed in May 2022, pulling crypto into its longest bear market in history by at least one metric.

Potential approval for spot bitcoin ETFs from banks like BlackRock and Fidelity may have pushed bitcoin higher. The DOJ finalizing its case against Binance and co-founder Changpeng Zhao also appear to have helped, with markets no longer wondering about the worst case scenario.

While not an exact science, standard definitions say that bull markets are confirmed when an asset climbs 20% from recent lows, and bear markets demand a 20% drop from prior highs. 

The S&P 500, for example, confirmed in June that it had been in a bull market since lows of October 2022.

The log view better compares bull market returns

Because crypto is typically more volatile than stocks or real estate — sometimes swinging 20% either way in a matter of days — it’s probably more realistic to confirm bull and bear markets over a longer period of time.

So, let’s say a crypto bear market starts when a token stays 20% below its most recent high for two months or more. And a bull market begins when it climbs that much above its latest lows and stays there for one month or more.

• That would mean bitcoin has been in a bull market, its fifth ever, for the past 296 days.
• On January 12, 2023, Bitcoin first traded 20% above lows set just before FTX declared bankruptcy last November.
• Bitcoin held onto those gains for one month to start the bull market on February 12, 2023.

Napkin math like this is fun, but it should be stressed that bitcoin, like all other cryptocurrencies, is an incredibly young asset. 

With only around 13 years of price history, it’s somewhat silly to expect any real insight from studying its past performance, whether it’s about bull markets or the impact of halvings.

Still, plotting out bitcoin’s bull run so far against its previous major rallies shows some correlation: its returns match the previous two runs almost exactly: 170% compared to 165% in 2020 and 140% in late 2015.

Those rallies topped out years later up thousands of percent, although this time might pale in comparison as bull run returns have diminished every cycle. 

Bull markets also don’t go in a straight line, with price corrections between 30% and 50% common across cycles even in multi-month uptrends.

In any case, the last two bull markets lasted more than two and a half years each — so it could be early days if the bull is truly back.

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