What Investors Do When They See Signs of a Bull Run

Bull markets — those prolonged periods when prices steadily rise, often begin subtly. A small uptick in prices, a positive macroeconomic report, or a sudden surge in optimism can signal the start. But how do investors behave in these early stages? The answer is not only fascinating but also critical for traders and portfolio managers aiming to get ahead of the curve.

Understanding investor psychology and behavior during the onset of a bull run helps distinguish seasoned strategists from reactive participants. From cautious repositioning to sudden FOMO-driven buying, behaviors can be diverse and contradictory. At this point, many newcomers start asking: what is a bull run in crypto? They try to make sense of the rapidly shifting sentiment and price momentum.

Initial Skepticism: The Cautious Wait-and-See Phase

Many investors are still unsure when the first symptoms of a market change arise. They tend to wonder if the change is real or just another dead-cat bounce after a bear market or a long period of no growth. It’s normal and frequently smart to be careful, but it also means that a lot of people miss the best times to get in.

At this point, most people in the market use technical and macro indicators a lot to confirm any bullish trend. People start to pay more attention to volume rises, moving average crossovers, and announcements of economic stimulus.

Common behaviors in this phase include:

• Reducing exposure to defensive assets (like bonds or cash equivalents).
• Reallocating small portions of capital into higher beta stocks.
• Monitoring leading sectors such as technology or consumer discretionary.
• Tracking sentiment indicators and news headlines closely.

This is a period where deep research and patience are key. Long-term investors might begin dollar-cost averaging into ETFs or strong blue-chip stocks, while traders hunt for breakouts supported by volume.

FOMO Sets In: Fear of Missing Out

Once the market gains traction and indexes start breaking key resistance levels, the psychological shift becomes visible. Media headlines turn positive, analysts raise earnings forecasts, and social media buzz increases dramatically. This is when FOMO, the fear of missing out, begins to dominate investor behavior.

Retail traders, in particular, often re-enter the market en masse, buying into trending assets and momentum trades. Volume spikes, volatility increases, and short-term traders capitalize on the exuberance.

Indicators that FOMO is influencing behavior:

• Sudden spikes in meme stocks or speculative altcoins.
• Increasing Google Trends interest for phrases like “how to invest in bull markets.”
• Over-subscription to IPOs and token launches.
• Surging inflows into leveraged ETFs and high-risk instruments.

During this period, momentum takes precedence over valuation. While some experienced investors take profits, others ride the wave by employing tight stop-loss strategies.

Institutional Participation: The Silent Accumulation

As the bull trend solidifies, institutional investors begin to accumulate assets more aggressively, but quietly. Unlike retail investors, institutions tend to operate systematically, gradually increasing exposure while maintaining risk controls.

They often favor sectors that show relative strength early in a cycle, like tech, industrials, or small-caps. They might also use options or futures to hedge their positions, reducing downside risk while positioning for long-term upside.

Key characteristics of institutional behavior:

• Accumulation during periods of low volatility.
• Preference for fundamentally strong companies with growth potential.
• Deployment of algorithmic and quantitative strategies.
• Use of dark pools and block trades to avoid moving the market.

This phase often marks a transition in market leadership and confirms that the bull run has deeper structural support.

Retail Boom and Herd Behavior

As prices continue to rise, retail participation surges. Social media platforms like Reddit, X (formerly Twitter), and TikTok become hotspots for trading ideas. Influencers hype new tokens, stocks, or ETFs, sometimes without solid fundamentals. A wave of new brokerage account openings often follows.

This is when herd behavior becomes visible:

• Investors pile into the same “hot” names.
• Rational analysis is replaced by emotional trading.
• Overconfidence in continued gains becomes widespread.
• Leverage use spikes, especially in derivatives and margin accounts.

While this surge adds to bullish momentum, it can also set the stage for short-term corrections. Smart investors remain aware of sentiment extremes and protect gains with trailing stops or covered calls.

Strategic Rebalancing: The Professional Approach

Experienced traders and portfolio managers often take a different path during the early bull phases. Rather than jumping in with both feet, they rebalance their portfolios gradually, shifting from low-risk to higher-return assets while maintaining diversification.

They also understand that a true bull run is a marathon, not a sprint. Managing position sizes, maintaining liquidity, and continuously evaluating macro trends are all part of a strategic approach.

Key strategies include:

• Rotating from defensive to cyclical sectors.
• Adding growth stocks with solid fundamentals.
• Gradually reducing bond exposure as equity confidence grows.
• Avoiding overexposure to any one asset or sector.

These investors also remain vigilant. Just because the market is bullish doesn’t mean risks disappear—geopolitical shocks, inflation surprises, or sudden policy changes can derail even the strongest rallies.

Behavioral Biases to Watch For

Even seasoned investors aren’t immune to psychological traps. The early bull phase is ripe with emotional decision-making, often leading to suboptimal outcomes.

Some common biases include:

• Confirmation bias: Only seeking information that supports a bullish view.
• Recency bias: Overweighting recent market performance in decision-making.
• Overconfidence: Assuming one’s success during a bull run is due to skill rather than market conditions.
• Herd mentality: Following the crowd without independent analysis.

Recognizing these biases is key to maintaining a disciplined, data-driven investment process.

Timing Is Important, But Behavior Is Critical

The early stages of a bull run can be the most profitable, but also the most psychologically challenging. While it’s tempting to follow the crowd or rush in based on hype, history shows that those who combine rational analysis with patient positioning often come out ahead.

Investor behavior during this phase ranges from cautious optimism to irrational exuberance. Understanding these patterns, whether you’re a retail trader or an institutional manager, can provide a powerful edge. In the end, success in a bull market is less about speed and more about strategy, discipline, and emotional control.