First bull run coming up for me and I am just wondering what we should all realistically be expecting over the next 18 months or so?
Looking at the last bull run, Bitcoin hit $61k in March 2021 then crashed back down to $31k 4 months later and then hit all time high in November 2021.
Is the crash down to $31k normal during a bull run or did something happen?
I am just trying to put my plan together when it comes to selling and don't want to sell too much too soon.
The mid-bull run crash in 2021 was not normal. But also we've only got a few data point to go off of, so we can't truly say what is normal. But that mid-bull run crash basically happened because two things happened around the same time.
1. Elon Musk said they would no longer accept Bitcoin payments for Tesla cars (a complete non-event, but millions of crypto people were hanging on Musk's every word that year so him saying anything about Bitcoin had a huge effect on price)
2. China announced their total ban on bitcoin mining and bitcoin trading
Those two things brought about that 50% drop.
It is normal to get 20%-40%+ corrections that last a few weeks during a bull market. But that 50%+ drop was more serious and longer than normal corrections. Again, it was because of the two events mentioned above. It was serious enough that many people were claiming the bull market had already ended at that point, even though it was only mid-year of the bull run year. I wouldn't expect that sort of drop again unless there is some major event that spooks the market.
Things to look for this bull run:
1. The time schedule may very well be sped up compared to normal. The ETFs have brought a whole new market into Bitcoin - TradFi investors. They are dumping many billions of dollars into Bitcoin and it is pushing the price already up to a level we normally wouldn't expect until months after the halving. I expect we may very well enter the main part of the bull run (passing the old all time high of $69k) by this summer, rather than towards the end of the year or next year. This could also mean the bull market will end during the first half of next year rather than go to the end of next year.
2. Since we have access to the flows in the ETF market, watch those flows during the bull market. We don't know how those investors will react. TradFi isn't used to the sort of gains bitcoiners see. They may sell very early in the bull market because they simply can't believe an investment of theirs can go up so quickly. Then again, if they actually understand what they got into with Bitcoin, they may act like everyone else and keep FOMOing into the market as it rises to a peak. But watching the daily net flow of the ETF market will tell the story once we get full on into the bull run.
3. I'd say a good guess at the top of the bull run is $150k. Maybe it'll be a small bull run and peak at like $120k. Or maybe thanks to ETFs opening up a whole new market for Bitcoin perhaps it goes to like $180k or higher. Impossible to know, and we'll only know after the fact. If you are planning to sell during the bull run I'd guess the best strategy is to sell a little bit at a time, starting at $120k, and just sell a little like once a week or something from that point onward, to make sure you don't miss the top entirely. Just as its better to DCA the bottom rather than trying to guess and possibly missing the bottom entirely, it's better to DCA-sell the top if you are selling during the bull run, rather that risk missing the top entirely.
4. Expect plenty of volatility. Any time you are thinking "wow its shooting up there's no way we'll go back down to the price it was last week", be assured it probably will correct back down there before proceeding higher. But also don't freak out on big corrections. Lots of people sell early in bull markets on the first big correction they see, especially if its their first bull market. I got one of my brother's to buy half a bitcoin in 2017 at like $2500, but he freaked out the first correction he saw when the price went from like $4800 down to $3000. Also our cousin who is a banker told him Bitcoin was going to end in a bad way and he needed to get out (years later that banker cousin actually trades Bitcoin lol, even bankers can eventually learn!). But point is he sold with like $1000 gain on a correction, when just a few months later the price peaked at like 6x the price he sold at. So don't fear corrections, but also try to have a sense of when the bull market might be ending so you know the difference between a correction and the start of the bear market. Not that that is an easy thing to know haha.
5. IF there is a big crash during the bull market like in 2021, you should reset your expectations. Most people expected Bitcoin to pass $100k in 2021, but that mid-run crash took a lot of steam out of the market. It took the rest of the momentum of the bull run just to get back up to the $60,000s and pass the earlier ATH by a few thousand. So if something does cause a major crash during the bull market, expect that the peak will be less than what people expect. Though hopefully that sort of bull run crash was a unique event as it really did cause the bull run to be quite small.