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Morgan Stanley Wealth Management, the asset management unit of the US-based banking giant Morgan Stanley, has published an article focusing on the possibility of the current bear market in cryptocurrencies coming to an end. The article highlights that the crypto winter that hit the market may have reached its end.
Morgan Stanley Wealth Management stated that “Current data indicates a high probability of the end of the crypto winter and the imminent arrival of the crypto spring.” The company noted that after previous crypto winters, Bitcoin generally reached its bottom level within 12 to 24 months after reaching its peak. Bitcoin reached its all-time high of around $69,000 in November 2021 and hit bottom a year later in November 2022.
Denny Galindo, a strategist at Morgan Stanley Wealth Management, commented in the article that “A price increase of over 50% in Bitcoin is usually an indication that the bottom has been reached.” The world’s largest cryptocurrency has risen over 70% since the beginning of the year and 77% since its bottom level last year.
The asset management company emphasized that the magnitude of the decline in Bitcoin is a critical factor in determining the crypto winter and crypto spring, stating that previous bottoms generally occurred with a decline of approximately 83% from the peak. In November 2022, BTC dropped to around $16,000, a decrease of about 77%.
The Biggest Trigger for the Rise Will Be the Halving of Block Rewards
Galindo explained that most of Bitcoin’s gains come immediately after a block reward halving and that the bullish market period begins with the halving of block rewards and ends when Bitcoin reaches the previous peak price.
Approximately every four years, a block reward halving occurs, which means that the reward for a successful block in Bitcoin mining is reduced by half. This reduces the inflationary pressure on Bitcoin. The next block reward halving is expected to occur in approximately six months, in April 2024.
Galindo said, “The scarcity created by restricting the supply of Bitcoin can affect its price and potentially trigger a bull market.” He stated that there have been three significant bull market periods since the beginning of Bitcoin, and each of them occurred after a block reward halving. Each period lasted for about 12 to 18 months.
