According to wealth management firm, Morgan Stanley, there are signs that the crypto winter may be over, bringing in a new season of growth and market activity. In a recent blog post, the company explained key market concepts and analyzed the bear market, its implications, and the upcoming cycles before and after the next year’s halving event. The analysis focused on Bitcoin (BTC), which remains the largest cryptocurrency with around 50% of market share and is considered a significant factor by investors and the media.
The Impact of Halving Events
Historically, Bitcoin has experienced substantial gains after each halving event, which takes place every four years and reduces miner rewards by 50%. The process of halving creates scarcity, giving BTC more value and potentially triggering the next bull run. Over the years, the market has witnessed three bull runs lasting around 12 to 18 months after halvings. These periods, known as crypto summers, continue until the asset’s price reaches the previous cycle’s high.
Once BTC surpasses its all-time high and sets a new one, it signals the end of the bull season, marking the beginning of the fall. During this phase, the market experiences significant interest from the media and investors. However, as investors seek to profit from their holdings, there is a surge in sales, leading to a decline in prices. This period is commonly referred to as the digital asset winter.
The Arrival of the Crypto Spring
After the crypto winter, there is a period known as the crypto spring, which serves as a pickup point before the halving event. This phase is still characterized by low institutional numbers and cautious market sentiment. However, it indicates a potential recovery and sets the stage for a new cycle of growth.
Despite current market conditions being perceived by some as signs of the winter due to tightening conditions and industry challenges, analysts at Morgan Stanley believe that the winter may have come to an end. With BTC’s year-to-date (YTD) growth of over 70% and a potential halving scheduled for April 2024, the signs of spring are beginning to emerge.
