Morgan Stanley report: Crypto winter may thaw, and the next BTC halving may trigger a new bull market.
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Morgan Stanley’s wealth management division believes that the cryptocurrency winter may be over and that BTC’s next halving event could usher in a new bull run. In their report titled “Will Crypto Spring Come?”, they delved into the four-year cryptocurrency cycle and the importance of BTC’s halving event to the market.
“There are signs that ‘crypto winter’ — BTC’s periodic bear market declines — may be a thing of the past,” said analyst Danny Galindo in the report.
The report compares the four-year cycle of cryptocurrency to the four seasons of a year, including summer, autumn, winter and spring. The summer phase begins with the BTC halving event, which causes the supply of new BTC to be halved. Historical data shows that this period is usually accompanied by a sharp rise in BTC prices.
In past cryptocurrency cycles, the fall phase marked the peak of the market, with BTC attracting attention from the media, new investors, and businesses. The market then entered a winter phase, similar to a bear market, as investors began to lock in profits and withdraw funds.
However, before each halving event, the BTC price usually rebounds from the lows and enters a spring phase, preparing for the next halving event and the subsequent bull run. This cycle has occurred three times, and each cycle lasted about 13 months.
Analysts at Morgan Stanley believe that BTC’s halving events play a key role in driving the cryptocurrency’s value.
Galindo’s view suggests that most of BTC’s gains typically occur after the halving event every four years, which supports the possibility of a spring for the cryptocurrency.
Regarding the signs of spring, the report points out that there are several key factors to consider. First, according to historical patterns, in past crypto winters, BTC’s lows usually occur about 12 to 14 months after the previous bull market high, so market cycles have a certain timeline.
Another key factor is the magnitude of the BTC price drop from its all-time high. In past crypto winters, BTC prices typically fell by about 83%.
The behavior of K workers is also an important indicator, because when BTC approaches the low point of the previous cycle, some K workers may stop operating due to unprofitability. K worker activity can be monitored through "BTC difficulty", which measures the difficulty of WK. If the difficulty drops, it means that the market is close to a low point.
The "BTC price to heat capacity multiple" is also a key metric, which measures the total investment in BTC since its inception. A lower price to heat capacity ratio generally means that the market is slumping, while a higher ratio indicates that the market is approaching a peak.
The report added that price action could also signal the beginning or end of a new cycle. A sharp 50% increase in BTC prices from a low usually indicates that the market is hitting a bottom. However, sometimes a rise in prices can be followed by a sharp drop.