Recently, I’ve been thinking about an interesting phenomenon: why does a bull market always show a pattern of slow rise and sharp fall? It gradually climbs up during the day, but can crash down instantly.

Actually, the logic behind this is quite clear. In the early stages of a bull market, many people don’t believe it’s a bull market at all. They think they’ll only recognize it once the market doubles, hits new highs, or assets surge five to ten times. But little do they know, the trend of the bull market has already been forming in the shadows.

At this point, a continuous influx of capital enters the market, daily pushing it upward. Even if it rises in the morning and then plunges, or drops sharply in the afternoon, there will still be buyers stepping in during the last half hour, and it ultimately closes higher. This is the order dominated by bulls—no matter how volatile, the outcome points to an upward trend.

But this also means that daily gains won’t be too large. After all, there are always bullish and bearish disagreements each day, and negative news is quickly digested by the market, sometimes even interpreted as positive. Under the influence of so many factors competing, a phenomenon emerges: although the market rises every day, the magnitude varies—sometimes a big rally in one day, sometimes small gains over several days. This slow and steady pace of increase is the normal state of a bull market.

The problem lies here—during this gradual rise, a large amount of profit-taking accumulates. Many investors don’t truly have a bull market mindset; they’re just looking to speculate, planning to sell once they see the top. If one day the market suddenly drops and doesn’t immediately rebound, it triggers a wave of selling from countless speculators and skeptics of the bull market, turning into a crash in an instant.

Therefore, the essence of slow rise and sharp fall is the collision between the fragility of market confidence during a bull run and the instability of profit-taking positions. Understanding this is very helpful for grasping market psychology.