Morgan Stanley: Bitcoin’s Halving Event Could Mark the End of Crypto Winter
According to a report published by investment banking giant Morgan Stanley, Bitcoin’s upcoming halving event in six months could signify the beginning of a new bull market. The report suggests that the “crypto winter” may already be over.
Defining Crypto Winter
Morgan Stanley Wealth Management defines crypto winter as a phase in the four-year cryptocurrency cycle that occurs after Bitcoin reaches an all-time high and investors start selling their assets, leading to decreased investor interest. Typically, this period lasts for about 13 months before the next price drop.
The report states that current data indicates crypto winter may be behind us and crypto spring is on the horizon.
Timing and Magnitude of Bitcoin’s Drawdown
The report emphasizes the importance of considering the timing and magnitude of Bitcoin’s drawdown to determine the end of crypto winter. It notes that previous troughs were around 83% off their respective highs.
Bitcoin reached its all-time high in November 2021 at $69,000. The lowest price it has seen since then was $15,500 in November 2022 after FTX filed for bankruptcy, representing a 77% drawdown from the peak. Bankruptcies are considered indicators of a trough by Morgan Stanley.
The current price of Bitcoin is $28,600, showing a 72% increase year-to-date. According to the bank, a 50% increase from the low is typically a positive sign that the trough has been reached.
The Significance of Halving
The Bitcoin halving event occurs every four years and reduces the supply issuance rate by half each time. This makes mining more challenging. The next halving will decrease the coins earned per block from 6.25 BTC to 3.125 BTC.
Morgan Stanley suggests that halvings are closely tied to the four-year cryptocurrency cycle, and intentionally limiting the supply of new Bitcoin can impact its price, potentially leading to a bull run.
Standard Chartered’s Bullish Prediction
British multinational bank Standard Chartered also predicts a positive outcome from the upcoming halving. In July, the bank projected that Bitcoin would reach $50,000 by the end of this year and $120,000 by the end of 2024.
While some analysts believe that Bitcoin’s price movements following halving events are coincidental and driven by macroeconomic factors, Morgan Stanley’s report suggests that the halving could mark a turning point for Bitcoin and the broader cryptocurrency market.
Hot Take: Bitcoin Halving Event May Spark a New Bull Market
Morgan Stanley’s report argues that Bitcoin’s upcoming halving event could be a significant milestone in ending the crypto winter. By examining the timing and magnitude of previous drawdowns, the report suggests that Bitcoin has likely reached a trough and is poised for an upward trend. The bank also highlights the impact of halvings on Bitcoin’s price, with intentional supply limitations potentially spurring a bull run. While some analysts may attribute Bitcoin’s price movements to external factors, Morgan Stanley believes that the upcoming halving could be a catalyst for renewed investor interest and market growth.
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