The year following each Bitcoin halving is a big bull market! 🫰

《Understanding Bull Markets》

Market trends are fundamental elements of financial markets. A bull market (bullish market) is a financial market condition where prices are rising. It applies not only to the stock market but also encompasses foreign exchange, bonds, commodities, real estate, and cryptocurrencies, and can refer to specific assets or industries.

"Bullish" means expecting prices to rise; although it is often associated with going long, it is not absolute. A bull market does not mean that prices will not decline or fluctuate; generally considered over a longer time frame, it may include periods of decline or consolidation without changing the primary upward trend. For example, Bitcoin has experienced declines and crashes, but overall shows an upward trend.

Examples of bull markets are more typical in the stock market, such as the sustained rise of the Nasdaq 100 Index. The global economy cycles between bull and bear markets, and some believe the period from the 2008 financial crisis to the COVID-19 pandemic was "the longest bull market in history." Looking at the century performance of the Dow Jones Industrial Average, there have been recessions, but the overall trend has been upward.

A bear market is the opposite of a bull market; prices continue to rise in a bull market, while prices continue to fall in a bear market, leading to different trading strategies. Traders and investors typically go long in a bull market, while in a bear market, they go short or hold cash, with cash holdings often aimed at preserving capital. Shorting aims to profit from asset price declines, and short positions may involve fees, whereas holding stablecoins incurs no custody costs.

In a bull market, traders find that due to rising prices, going long and buying on dips are reasonable strategies. Buying and holding or dollar-cost averaging is suitable for a long-term bull market. However, it is essential to remember that "the trend is your friend until it is no longer a trend." Markets can change, and a multi-year bull market can disappear swiftly. Most investors are bullish during a bull market, but some are bearish and profit through shorting or other short-term strategies; however, these are often advanced strategies for professional traders. Less experienced traders are wiser to trade according to the trend to avoid being trapped.

In summary, bull markets offer excellent trading opportunities, and newcomers can participate, but it is crucial to manage risks, continue learning, avoid mistakes, and follow the overall trend direction in trading.