Why do bull markets always see slow rises followed by sharp sell-offs? I think there’s a psychological game worth noticing behind it.

You’ll find that in the very early stage of a real bull market, few people dare to say it’s a bull market. Everyone is thinking that you have to wait until the overall market doubles, makes new all-time highs, and individual stocks rise five or ten times before you can confirm that this is a bull market. Because this kind of skepticism is so common, incremental capital keeps quietly moving in, pushing the market higher day by day.

But in this process, the “slow rise” characteristic is very clear. Every day, there are disagreements between long and short positions. When bad news appears, the market can still digest it quickly, or even reverse the interpretation and treat it as good news. With so many factors interacting with each other, you end up with a situation where prices are rising every day, yet the rate of increase is sometimes large and sometimes small. Sometimes there’s a big rally in a single day, followed by several days of small gains—the pace isn’t even.

The most dangerous part of this process is that a large number of profitable positions gradually pile up, while many investors actually don’t truly believe in the bull market. They’re just thinking of making a quick trade—once the price reaches a certain high point, they’ll run. If one day the stock market suddenly drops and doesn’t bounce back, these speculators and bull-market skeptics will all sell off together, forming a sharp sell-off.

So you see, the essence of slow rises followed by sharp sell-offs is the moment when the order under the dominance of the bulls gets broken. In normal times, incremental capital can hold up the market and keep the gains at a relatively moderate level, but once confidence collapses, these floating positions can instantly dump the holdings. That’s also why, in a bull market, the upside looks steady but the downside arrives especially fast and especially harsh. For people holding popular assets like PEPE, SHIB, and FLOKI, understanding this pattern can help you better deal with the risk of sudden sharp sell-offs in the market.