That bulge is a lower sidewall separation. There are a number of possible causes, but the most likely cause is the turn up separating between the turn up and the inner continuous ply. I guess I need to describe what a turn up is.
A tire is built up in a series of layers on a drum, from the inside out, from a series of hoop like layers. The first layer is the innerliner - the air retaining layer of rubber that goes from bead to bead. It serves the same function as a tube and, in fact, is made of the same material, typically butyl rubber.
On top of that layer are the plies - layers of fabric completely impregnated with rubber, like cloth. The fabric in the ply are parallel cords and the rubber is pressed into the cord to form a sheet.
Those plies are applied to the drum, again forming a hoop. Those layers are turndown around the edges of a drum and a bead is pressed against the edge of the drum. The bead is a hoop of rubber impregnated wire wrapped many times into a hoop.
The ply is then "turned up" around the bead and the ends of that ply are pressed against the previously applied ply layer. That edge is called a turnup as is the process to make it.
The separation is occurring between those 2 layers. It starts at the end of the turnup and grows downward, forming the bulge. If you cut open the bulge, you will find crumbly rubber between those 2 layer. (Crumbly? How's that for a technical term!) Those crumbs are caused by the rubber abraiding off the cords.
It can be the result of operating the tire overloaded (or underinflated - the same thing from a tire engineer's perspective), but at not enough speed to generate enough heat to cause the belt edge to fail (which is the much more common failure of a steel belted radial tire.
I did a quick internet search for a video of a tire being built. Here's what one I think works:
Tire building
The beads are applied at 13 seconds into the video and the turn up sequence occurs at 16 seconds.