Major investment bank Morgan Stanley has officially called an end to crypto winter in a new report, stating they believe the extended bear market is now behind us. The firm predicts Bitcoin’s next halving event will likely ignite a new crypto bull run.
Keypoints
- Morgan Stanley believes the crypto winter is ending based on historical market cycles tied to Bitcoin’s halving events.
- Past halvings kicked off bull runs with BTC price surging to new highs for around 12-14 months post-halving.
- Current data suggests conditions are ripe for the next halving in 2024 to spark a new crypto spring and bull market.
- Metrics like BTC’s 83% price drop from its peak, decreasing mining difficulty, and the price-to-thermocap ratio all signal the trough of the bear market is here.
- A 50% BTC price increase from the trough also typically indicates the bottom is in place before a new bull run.
- Morgan Stanley predicts the next halving in April 2024 will drive major gains in Bitcoin, attracting renewed interest and investments into crypto.
Morgan Stanley analogized the boom-and-bust cryptocurrency market cycles to the four seasons. They state that just as winter transforms into spring, the crypto markets appear to be transitioning into a renewed growth phase.
Several metrics back up their assessment that the crypto winter trough is here. Bitcoin is down around 83% from its peak, consistent with past bear markets. Mining difficulty has decreased as miners capitulate. And the price-to-thermocap ratio, which compares price to total investment in BTC, signals a cycle bottom.
Historically, Bitcoin halving events have kicked off intense bull runs as new supply is cut in half. Morgan Stanley points out that Bitcoin sees the bulk of its gains in the 12-14 months directly following each halving.
With the next halving estimated around April 2024, the firm expects this reliable market dynamic to drive a fresh surge in Bitcoin prices and usher in a new crypto spring. As Bitcoin reaches new highs, investor interest and commercial adoption is likely to follow suit.
The prospective launch of a Bitcoin spot ETF in the US could further propel this predicted bull run by providing new exposure channels for institutional capital.
If Morgan Stanley’s analysis proves accurate, better days seem to be on the horizon for the crypto industry after a prolonged downturn. The from-winter-to-spring metaphor may soon play out in real market action over the coming year.
