In a recent report Morgan Stanley provides a comprehensive look into the cyclical nature of cryptocurrency, particularly focusing on Bitcoin (BTC), which accounts for about half of the entire digital asset market by capitalisation. Current estimates show the Bitcoin halving is only six months away. Meanwhile Bitcoin struggles with the US $30k ($47,470) mark, briefly surpassing it over the weekend only to dip below once again.

 Source: CoinMarketCap

Bitcoin Season Breakdown

Every four years, Bitcoin undergoes a “halving” that limits its supply, potentially causing a price surge. Morgan Stanley categorises this cycle into four phases:

After halving, during “Summer,” Bitcoin’s price typically rises until it matches its former peak.

In “Autumn,” prices climb past this peak due to media interest and new investors.

“Winter” sees a bearish trend with investors selling, causing price drops for several months.

Finally, in “Spring,” prices rebound from their lowest, but investor interest remains muted.

How to Spot Spring Time

To determine the onset of a ‘crypto spring’, Morgan Stanley suggests considering factors like the time elapsed since the last peak, the extent of Bitcoin’s price drop, miner activities, and a few other technical indicators.

While some signs suggest we might be transitioning from a crypto winter to a crypto spring, it’s essential to remember that historical patterns don’t guarantee future outcomes. External factors, such as government regulations or software issues, could disrupt this cycle.

Although it remains uncertain if now is a good time for investment, understanding these cyclical trends could be invaluable for potential investors.

Denny Galindo the author of the report stated,

New Price Target at US $128K

Technical analyst CryptoCon stated that the most accurate predictor of Bitcoin’s cycle top is derived from the gains of the first cycle, measured wick to wick. By replicating the gains from another early point in Bitcoin’s price history (indicated by green and yellow arrows), the next predicted target is U $128,000 ($202,000).

They stated that this prediction heavily depends on the accuracy of the chosen retrace wick (yellow arrow). If this is incorrect, CryptoCon said using the black arrow as reference would suggest a potential price of US $233,058 ($368,058), though deemed this less probable. Remarkably, the $128,000 prediction aligns almost perfectly with a Trend Pattern Price Model, they concluded.

However, while past performance can be a useful piece of the decision-making puzzle, it should be combined with other analytical methods, a clear understanding of current market conditions, and a forward-looking strategy.

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Filed under: Bitcoin - @ October 23, 2023 3:04 am