In the ever-evolving realm of cryptocurrency, the behemoth that is Bitcoin (BTC) continues to make waves in financial circles. The buzz amplifies as we inch closer to its anticipated halving event, slated to transpire in six months. Morgan Stanley released a discerning report last Tuesday, hinting at the dawn of a bullish market tide with this event.
Shifting Seasons in Cryptocurrency Landscape
Drawing a vivid analogy to nature’s “four seasons”, Morgan Stanley postulates that the “crypto winter” might have already receded. The firm illustrates the “crypto winter” as a chapter in the “four-year cryptocurrency cycle.” The cycle commences after Bitcoin’s pinnacle price, causing a market stir as investors offload assets. Unfortunately, that also deters fresh investments. This phase spans 13 months, ushering in the ensuing price low.
Following this winter phase is the so-called crypto spring. Despite a lackluster investor engagement, it portrays Bitcoin’s gradual rebound from its nadir. The report expresses optimism, citing present metrics hinting at an ancient crypto winter and a burgeoning crypto spring.
Morgan Stanley sheds light on the importance of noting both the timing and magnitude of Bitcoin’s price dips to ascertain the crypto winter phase’s end accurately. The report highlights, “Historical lows were about 83% adrift of their peak values.”
Bitcoin touched a record price in November 2021, peaking at $69,000. After that pinnacle, it plunged to a low of $15,500 in November 2022. The dip coincided with the bankruptcy declaration of the crypto exchange FTX. Morgan Stanley says such market mishaps, like exchange bankruptcies, are deemed robust indicators of a price trough.
The cryptocurrency has since made strides, now trading at $28,600 – registering a 72% appreciation year to date. Morgan Stanley acknowledges, “A 50% price ascension from Bitcoin’s low generally heralds the trough’s surpass.”
Morgan Stanley on the 2024 Halving
The halving phenomenon in Bitcoin’s saga is a programmed reduction by 50% in the issuance rate of new coins every four years, escalating the mining difficulty. The impending halving will slash the rewards per block from 6.25 BTC to 3.125 BTC.
Morgan Stanley and numerous market analysts opine that such halving events are intertwined with the four-year cryptocurrency cycle. Findings are based on the previous three cycles. The firm observed that the orchestrated reduction in Bitcoin supply via halving could instigate a price rally owing to the engendered scarcity.
Across the pond, the British banking giant Standard Chartered echoes a bullish sentiment towards the upcoming halving. In a July forecast, it envisioned Bitcoin escalating to $50,000 by year-end. Moreover, the bank expects BTC to soar to $120,000 by the close of 2024.
The conjectures surrounding Bitcoin’s price trajectory after the halving and the potential ushering of a bullish market fuel discussions among investors and financial pundits alike. However, it’s time to pay attention when big banks express a bullish outlook. That doesn’t mean the market will follow the projected path, however.
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