Leading investment bank, Morgan Stanley, released a report on Tuesday suggesting that the Bitcoin (BTC) halving event due in six months could signal the start of a fresh bull market. The bank refers to Bitcoin’s “four seasons”, asserting that the “crypto winter” may have already ended.
The End of Crypto Winter
According to Morgan Stanley Wealth Management, the cryptocurrency “winter” is a phase in the “four-year cryptocurrency cycle” that kicks off after Bitcoin reaches a record high, leading to a sell-off by investors and discouraging new investments. This phase typically lasts around 13 months, culminating in the next price low. Following this is the crypto spring, a period of gradual recovery for Bitcoin, albeit with low investor interest.
“Based on the current data, there are signs that suggest that the crypto winter might be behind us and that a crypto spring is on the horizon,” Denny Galindo, the report’s author, noted. Galindo argues that both the timing and depth of Bitcoin’s slump should be considered when determining the end of a crypto winter. He noted, “Previous lows were about 83% off their respective highs.”
Bitcoin’s Current Stand
Bitcoin hit its current record high in November 2021 at $69,000. The lowest price since then was $15,500 in November 2022 following the bankruptcy filing by crypto exchange FTX – a 77% drop from the peak. Morgan Stanley suggests that issues with exchanges, such as bankruptcies, are also good indicators of a trough. Bitcoin is currently trading at $28,600 – a 72% increase year to date. “A 50% increase in price from Bitcoin’s low is typically a good sign that the trough has been reached,” the bank added.
The Halving
The Bitcoin halving is an event that takes place every four years, where the rate at which new Bitcoin is created is halved, making it twice as hard to mine each time. The upcoming halving will cut the coins earned per block from 6.25 BTC to 3.125 BTC. Morgan Stanley, like many analysts, believes that such halvings are directly tied to the four-year cryptocurrency cycle, three of which have occurred so far. “By intentionally limiting the supply of new Bitcoin, the shortage caused by the halving can affect the price of Bitcoin, potentially triggering a bull run,” the bank pointed out.
Standard Chartered, a British multinational bank, also holds a bullish view on the upcoming halving. In July, the bank predicted that Bitcoin would hit $50,000 by the end of the year and $120,000 by the end of 2024. However, some analysts argue that Bitcoin’s price appreciation following halving events is pure coincidence and that the asset’s price movements are primarily driven by macroeconomic factors.
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