Morgan Stanley (NYSE:MS) analysts, including Denny Galindo of Wealth Management, suggest a potential end to the 'crypto winter,' indicating the onset of a 'crypto spring.' The prediction is primarily based on the cyclical nature and price dynamics of Bitcoin (BTC), which dominates half of the cryptocurrency market share.
On Friday, Galindo pointed out that Bitcoin's lowest prices typically occur a year after its peaks. For instance, after reaching nearly $68,000 in November 2021, Bitcoin hit its lowest point about a year later. A recovery of 50% from these lows often signals the end of downturns. Currently, Bitcoin has marked a year-to-date (YTD) surge of over 70% and a 77% rise since last year's low, hinting at an end to the downturn.
Historically, price drops from peak values average around 83%. By November 2022, Bitcoin had fallen about 77% to roughly $16,000. However, the recent recovery signs show promise for the market.
These analysts also highlighted the recurring 'halving' events that reduce inflationary tendencies by halving mining rewards. These events often trigger positive price spurts lasting 12 to 18 months post-halving. Since Bitcoin's emergence, there have been three such price surges.
This analysis comes despite a bearish 'crypto winter,' characterized by reduced investments, miner's downturn, web3 collapses, and entities like Prime Trust Crypto Custodian filing for Chapter 11 bankruptcy. Nevertheless, with an upcoming halving date in April 2024 and BTC's recent gains, the market shows promising signs of recovery.
Historically significant BTC gains have been linked to these halving events and have triggered three bull runs since 2011. These bull runs lead to 'crypto summers' as BTC hits previous highs. Following these periods, increased media and investor attention typically occur as BTC sets new records.
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