Is the Crypto Winter Over? Morgan Stanley’s Optimistic View

In a recent blog post on its website, Morgan Stanley Wealth Management expressed confidence about the status of the cryptocurrency industry. The article makes the claim that the crypto winter, a protracted period of falling values, may be over and that a crypto spring is approaching.

The investment manager claims that historical data shows a pattern where the price of Bitcoin in prior crypto winters fell off about 12 to 14 months after peaking. Notably, Bitcoin touched its all-time low in November 2022 and its highest peak, which was over $68,000, in November 2021.

Morgan Stanley strategist Denny Galindo said that a 50% gain in the price of Bitcoin from its low is a key sign that the crypto winter is coming to an end. The market could have struck its bottom thanks to this rising momentum. With a 70% year-to-date growth and a 77% climb from its year-ago lows, Bitcoin has displayed extraordinary power in 2023.

The Importance of Magnitude

Morgan Stanley emphasizes the significance of the size of the Bitcoin decline as well. Prior crypto winters saw a price decline of almost 83% from all-time highs. In the case of Bitcoin, by November 2022, it had decreased by over 77%, to about $16,000. The price history of Bitcoin has often shown a decrease, followed by a substantial comeback.

The report emphasizes the significance of Bitcoin’s halving events, which occur roughly every four years. Halving refers to the reduction in rewards for successfully mining a Bitcoin block. This reduction in supply helps mitigate inflationary pressure on Bitcoin. Denny Galindo explains that “by intentionally limiting the supply of new Bitcoin, the shortage caused by the halving can affect the price of Bitcoin to potentially spur a bull run.” He adds that there have been “three such runs on Bitcoin since its inception, each lasting 12 to 18 months after the halving.”

The cryptocurrency world is anticipating the probable advent of crypto spring, a period of renewed confidence and upward momentum in the market for digital assets, as Bitcoin continues to show resilience and recoup value.