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When Will The Bitcoin Bear Market End? US Mega Bank Has The Answer

In a recent development, leading investment bank Morgan Stanley has weighed in on when the lingering Bitcoin bear market is likely to end. Interestingly, they share some similar views with analysts who have made predictions in the past. 

Bitcoin Halving A Major Factor

In an article released by the investment bank, Morgan Stanley highlighted Bitcoin’s importance as the leading crypto and how the Bitcoin Halving, which is set to take place in April 2024, could affect its price and other crypto tokens by extension. 

Bitcoin halving is a deflationary measure that occurs every four years, during which the rewards of miners are ‘halved’, thereby creating scarcity. According to the bank, this event could potentially trigger a bull run as it has done in the past. 

The article further noted how there have been such bull runs in the past following the three halving events that have occurred and how the bull run lasted for 12 to 18 months after then. 

Morgan Stanley’s prediction echoes that of several crypto analysts who have predicted that the Bitcoin Halving could spark the next bull run. Specifically, the co-founder of Delphi Digital, Kevin Kell, while highlighting metrics that showed that the next bull run was close, noted that Bitcoin has broken to a new all-time high (ATH) seven months after the last two halvings occurred.

Understanding The Four Phases Of Crypto

While trying to avoid giving a definite time as to when to invest ahead of the next bull run, Morgan Stanley noted the importance of learning about the ‘four phases of cryptocurrency prices’ in order for one to make a conviction play as to the right time to invest. These four phases are said to correspond roughly to the four seasons of the year. 

The first phase is ‘Summer’ when Bitcoin experiences the most gains, which comes after the halving. The bull run is said to begin with the event and continue when Bitcoin’s price hits its prior peak. The next is the ‘Fall’ when the price “surpasses the old high.” This is the period when the bull market runs its full course after reaching a new high.

After ‘Fall’ comes ‘Winter’, which is when the bear market surfaces as this is the period that investors are locking in their gains, resulting in a massive sell-off. This usually occurs between the “new peak and the next trough.” Historically, there have been three winters, with each of them lasting for about 13 months. 

‘Spring’ is the last phase in the cycle and the one that potentially kickstarts the next bull run (another Summer). This is the period “preceding each halving,’ when Bitcoin’s price “generally recovers from the cycle’s low point, but investor interest tends to be weak.”

By understanding these phases, crypto investors could be well-prepared to take advantage of the next bull run to make the most profits.

Bitcoin price chart from Tradingview.com (US mega bank Morgan Stanley Crypto bear market)

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Morgan Stanley Executive Predicts Bitcoin To Witness A Short-Term Rally

Over time, the crypto market has strongly correlated with US equities, and Bitcoin has indicated a significant correlation with S&P 500 index. The price of the primary crypto asset has followed a similar pattern to the stock.

Many predictions from experts on BTC were drawn from the possible outplay for the equity stock. Also, the response of Bitcoin to critical macroeconomic conditions is related to that of the stock index.

Following the correlation between the two markets, some market experts give forecasts for future price trends. According to Morgan Stanley’s CIO, Michael J. Wilson, the US will soon have a short-term rally of 16%. The bear market expert noted that the price surge would only be possible without an official recession or earning capitulation.

Short-Term Price Recovery In Stock Markets And Bitcoin Status

According to Wilson, the US stock market will witness a short-term recovery. This offers the possibility of the S&P 500 hitting the 200-weekly moving average (WMA), as per Bloomberg.

Due to the unfavorable macroeconomic conditions and the impacts of the increased interest rates, the index dropped this year. However, the present price movement for Bitcoin has not been too impressive.

BTC price is currently below its critical level of $20K. Also, the 200-WMA is close to the $23k region. Even with its short-term rally in August, Bitcoin is yet to cross the 200-WMA.

Bitcoin has experienced several price rallies following the crypto winter that pushed the price below $20,000 in June. But the battle seems to be unending. The bulls are yet to take a more potent force against the bears keeping the BTC price still hovering below $20K.

Recall that Wall Street’s most notable prominent bearish voice, Michael Wilson, predicted this year’s decline correctly. His position on a long-term overall negative trend in the stock market is still unfazed. But currently, he predicts a 16% short-term price rally.

The Wait For Feds’ Next Hike On Rates

Activities in the crypto market seem to be dragging. Most traders take their time with little or no significant transactions. Instead, they are expecting the outcome of the next Fed FOMC meeting slated on Nov 2. The decision in the meeting will drive the market for the next few months.

A report from the CME FedWatch Tool indicates a 95.4% possibility of another 75bps hike. Also, the Dollar index moves higher toward 113. Recall that the US Federal Reserve has maintained a hawkish stance in controlling inflation despite increasing fears of recession.

From Michael Wilson’s analysis, inflation has hit its peak. Though the core CPI data surged to a 40-year high, the Fed may impose a 50-bps hike on rates.

Bitcoin trends on the $19,500 line l BTCUSDT on Tradingview.com

At the time of writing, Bitcoin is trading at $19,536, indicating a rise of 1.42% over the past 24 hours.

Featured image from Pixabay and chart from TradingView.com

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Morgan Stanley Bags Over 58,000 GBTC Shares As Bitcoin Price Shakes

As Bitcoin and other cryptos gain more credence, many top shots in diverse industries embrace the crypto community.

Many companies, including Tesla, had accepted BTC payments once, and even a country like El Salvador is now using it as a legal tender. So, it’s not surprising that Morgan Stanly, an extensive American Investment bank, will buy shares of a Bitcoin Trust.

Related Reading | New To Bitcoin? Learn To Trade Crypto With The NewsBTC Trading Course

In a recent development, the bank acquired 58,000 shares of Grayscale Bitcoin Trust. It had previously owned some shares of the Trust, including the 28,289 shares bought earlier in 2021. This latest addition has increased the number of shares that the bank holds across many portfolios.

The investment bank disclosed this latest purchase through an SEC filing showing that it bought the shares on July 31, 2021. At the time of writing, the price of Grayscale BTC Trust stands at $32.55. The bank “Insight Fund” holds 928,051 shares which depicts a $31.7 million worth of shares for one of Morgan Stanley’s portfolios.

The Grayscale Bitcoin Trust is currently trading in a downward momentum | Source: GBTCUSD on TradingView.com

The bank’s announcement in April 2021 has added Bitcoin assets to at least 12 of its funds through the Grayscale BTC Trust plus Cash-settled Futures. The accumulated figure shows 6.5 million GBTC shares.

Companies Holding Grayscale’s Bitcoin Trust

Apart from Morgan Stanley, another investment bank pushing into BTC exposure is JP Morgan. It is the second-largest GBTC shareholder, while Cathie Woods Ark Investment remains in the first position to date.

Related Reading | Bitfinex To Roll Out Security Token Offerings (STOs) Platform In Kazakhstan

The firm disclosed in July that it had added over 450,000 GBTC shares in two purchases. Many others with GBTC shares include Goldman Sachs, JP Morgan, and BlackRock.

Featured Image from Pixabay, chart from TradingView.com