Bull and Bear Markets in Crypto: Reading the Cycle Without Getting Swept Up in It
What defines these phases, why crypto's versions are more extreme than traditional markets, and the behaviours that separate people who ride the cycle from people who get ridden by it.
By Firoz Khan|3 September 2026|Updated 11 October 2026|3 min read
A bull market is a sustained period of rising prices and growing confidence, a bear market its mirror image: falling prices and a general retreat in appetite for risk. Simple definitions, but crypto's versions of both run far more extreme, and far faster, than the equivalent phases in traditional markets.
Why crypto cycles are more violent than stock market cycles
Crypto markets are thinner, less regulated and more sentiment-driven than equity markets, with a retail base that trades around the clock and reacts quickly to news and social media momentum. That combination produces sharper rallies and steeper, faster drawdowns than an equivalent cycle in, say, the FTSE or S&P 500.
What past cycles looked like
Bitcoin peaked at about $19,800 in December 2017 and fell to about $3,100 by December 2018, a drop of more than 80%. In November 2021 it peaked at around $69,000, and by November 2022 it had fallen to about $15,500, roughly 77% below the peak. Sources quote slightly different lows, so treat these figures as approximate.
A fall that large needs a much bigger rise to undo. Say £10,000 at the peak falls 77% to £2,300. To get back to £10,000 you would need a gain of about 335%. The pounds are an example of the arithmetic, not a forecast.
Some analysts link these cycles to Bitcoin's halving, which cuts new issuance roughly every four years. The link is debated and not guaranteed to repeat, so it is not a timetable to plan around.
The behavioural pattern that repeats every cycle
Late in a bull run, buying accelerates specifically because prices have already risen, driven by fear of missing out rather than fresh analysis, which is what tends to mark the top. Early in a bear market, selling accelerates because prices have already fallen, driven by fear and loss aversion rather than a reassessment of fundamentals, which is what tends to mark unnecessary losses being locked in.
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A worked example of buying through a fall
Say you invest £200 a month. The price is £10 in the first month, £5 in the second and £8 in the third. You buy 20, then 40, then 25 units: 85 units for £600, an average cost of about £7.06 a unit. At £8 the holding is worth £680, a gain of about 13%, even though the price ended below where it started. The figures are an example of the arithmetic, not a forecast, and a steady purchase plan does not remove the risk of loss.
What actually distinguishes a healthy pullback from a genuine bear market
A pullback within a broader uptrend is normal and happens repeatedly even in strong bull markets. A genuine bear market is a sustained, structural decline, commonly defined as a drop of 20% or more from a recent peak, sustained over weeks or months rather than a single sharp dip that recovers quickly.
The practical takeaway
Position sizing decided in advance, before a cycle turns, holds up far better than decisions made in the middle of a rally or a crash, when emotion is running highest and judgement is at its least reliable. The investors who do best across a full cycle tend to be the ones whose buying and selling behaviour barely changes between the two phases, not the ones who time the turn perfectly.
Selling in a bear market and UK tax
In the UK, selling crypto is a disposal for Capital Gains Tax whether it is sold at a gain or a loss, so a run of panic sales creates a run of records. Keep the date, the quantity and the value in pounds for each one. HMRC treats each type of token as its own pool with its own pooled cost, so the cost you are working from is an average across your purchases, not the price of your last buy.
Losses and the allowance
Each sale in a run of panic sales is a disposal that needs its own record. GOV.UK lists the annual exempt amount as £3,000 for 2026 to 2027, and the rates from 6 April 2026 as 18% on gains within the basic rate band and 24% above it.
Write the plan before the cycle turns
- Decide in advance how much of your wealth can sit in crypto.
- Decide in advance what would make you add, hold or sell.
- Keep an emergency fund that does not depend on crypto prices.
Where to read more
- Crypto and inflation: what the evidence says about holding crypto through inflation
- Crypto whales explained: who moves prices in thin markets
- Crypto taxes in the UK: recording gains and losses
- Memecoins explained: the most extreme end of the cycle
A reminder
The FCA risk warning still applies to higher-risk crypto content. Always assess how much risk you are willing to take before buying.
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