Morgan Stanley Suggests ‘Crypto Spring’ as Bitcoin’s Cyclical Nature Emerges

Morgan Stanley analysts, including Denny Galindo from Wealth Management, are suggesting that the ‘crypto winter’ may be coming to an end, with the possibility of a ‘crypto spring’ on the horizon. This prediction is largely based on the cyclical nature and price movement of Bitcoin (BTC), which accounts for a significant portion of the cryptocurrency market.

On Friday, Galindo noted that Bitcoin’s lowest price points usually occur approximately one year after reaching peak values. For example, after peaking at nearly $68,000 in November 2021, Bitcoin fell to its lowest level about a year later. A recovery of around 50% from these lows typically indicates the conclusion of market downturns. Currently, Bitcoin has seen a year-to-date increase of over 70% and a rise of 77% since last year’s lows, suggesting a potential end to the decline.

Historically, Bitcoin’s price declines from peak values average around 83%. By November 2022, Bitcoin had dropped approximately 77%, reaching roughly $16,000. However, recent signs of recovery provide hope for the market’s revival.

The analysts also pointed out the importance of ‘halving’ events, which reduce inflation by cutting mining rewards in half. These events have been associated with positive price increases that tend to last between 12 and 18 months following the halving. Since Bitcoin’s inception, there have been three notable price surges attributed to these events.

This analysis comes in the context of a challenging ‘crypto winter,’ marked by reduced investments, declining mining activity, problems in the web3 space, and the bankruptcy filings of entities such as Prime Trust Crypto Custodian. Despite these hurdles, the upcoming halving event scheduled for April 2024, along with Bitcoin’s recent gains, hints at a potential market recovery.

Notably, significant gains in Bitcoin’s value have historically coincided with halving events, leading to three major bull runs since 2011. These bull runs often transition into ‘crypto summers,’ during which Bitcoin reaches previous highs. Following these peaks, there is typically a surge in media and investor interest as Bitcoin sets new records.