Morgan Stanley Predicts End of Crypto Winter

Morgan Stanley Wealth Management has hinted at the end of the crypto winter, suggesting that a crypto spring might be imminent. In a recent article on their website, the investment management firm analyzed the patterns of the bear market in digital assets and its potential trajectory.

The article highlighted that historically, the lowest point for bitcoin (BTC) during crypto winters has been observed 12 to 14 months post its peak. Bitcoin, which reached a record high of approximately $68,000 in November 2021, saw its lowest point a year later.

Denny Galindo, a strategist at Morgan Stanley, mentioned, “A surge of 50% from bitcoin’s lowest point usually signals the end of the trough.” Currently, bitcoin has seen a 70% increase year-to-date and a 77% rise from its lowest point last year.

The depth of the bitcoin price drop is also a significant factor. Morgan Stanley pointed out that past price lows were around 83% below their respective highs. By November 2022, BTC had seen a decline of nearly 77%, reaching about $16,000.

Galindo emphasized the importance of the halving event in bitcoin’s price dynamics. The halving, which occurs approximately every four years, reduces the reward for mining a bitcoin block by half, subsequently reducing the inflationary pressure on BTC. He stated, “The intentional reduction in the supply of new bitcoins due to the halving can influence bitcoin’s price, potentially triggering a bull run.” Since its inception, bitcoin has experienced three such bull runs, each lasting between 12 to 18 months post the halving.

Morgan Stanley’s analysis suggests that the crypto market might be transitioning from its bearish phase. With historical patterns and the effects of the halving event in consideration, there’s a growing optimism for a potential bull run in the near future.

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