Investing.com - The cryptocurrency sector is in a recovery phase, with Bitcoin at 30,000 and Ethereum at 2,600.
And this bullish phase may continue for some time, according to Morgan Stanley (NYSE:MS). According to the investment bank, the cryptocurrency winter is over and Bitcoin will enter a new bull phase as it has done in the past.
In a recent report entitled "Will Crypto Spring Ever Come?", the bank's wealth management division analyses the upside opportunities in this industry.
Morgan Stanley analyst Denny Galindo, author of the report, wrote:
"Signs indicate that the 'cryptowinter' (the cyclical bear market decline of bitcoin) may be in the past," notes Morgan Stanley analyst Denny Galindo, as echoed by CryptoSlate.
Galindo draws a comparison between a 4-year cryptocurrency cycle and the 4 seasons of the year. He detailed the 4 distinct phases of the cryptocurrency cycle, with each phase resembling a season: According to the report, the summer phase begins with the highly anticipated halving, i.e. the event in which the creation of new Bitcoin is halved.
Historically, this phase has been marked by substantial price increases in Bitcoin, as scarcity drives demand. It usually culminates when Bitcoin surpasses its previous all-time high, which generates euphoria in the market.
After reaching a new high, Bitcoin attracts new investors and arouses the interest of companies. This phase is reminiscent of summer and turns into autumn as the cryptocurrency market enjoys the warmth of renewed interest. It spans the period between the breaking of the old high and the establishment of a new peak, marking the climax of the bull market.
After the peak, the market enters a bear phase, similar to the beginning of winter. The market cools as investors lock in profits and disinvest in Bitcoin.
This phase has persisted for about 13 months, with prices experiencing significant declines from their peaks. It is a time of consolidation, correction and introspection for the crypto community.
The Morgan Stanley report says there are several key factors to consider in determining whether crypto-spring has arrived. Historical patterns reveal that Bitcoin's low point in previous crypto winters generally appears 12 to 14 months after the peak, providing a timeline for market cycles.
Another crucial factor is to measure the fall in Bitcoin's value from its historical peak. Bitcoin prices have plummeted approximately 83% from their previous highs in recent crypto winters.
Translated from Spanish using DeepL.