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Crypto Winter End in Sight for Institutions as ETFs and Halving Reinvigorate Interest

Published October 23, 2023 5:47 PM
James Morales
Published October 23, 2023 5:47 PM
Key Takeaways
  • Bitcoin has recently rallied above $30K for the first time in months.
  • Optimism surrounding the prospect of Bitcoin ETF approvals and next year’s halving has spurred optimism.
  • Even institutional investors appear to be celebrating the end of crypto winter.

If Bitcoin’s November 2021 all-time high price marked crypto’s hottest day of the year, what followed was a 13-month cold spell that saw the world’s preeminent cryptocurrency lose around two-thirds of its value. 

In 2023, the mild spring of January-March made up some of Bitcoin’s earlier losses but failed to transition into the strong recovery investors have been waiting for.

However, as the end of the year approaches, anticipation for next year’s halving event and potential Exchange-Traded Fund (ETF) approvals in the US are injecting the market with renewed optimism. Now, even traditionally conservative institutional investors are starting to talk about the next bull run.

Morgan Stanley Welcomes Crypto Spring

In a recent report , Will Crypto Spring Ever Come? Morgan Stanley analyst Denny Galindo discussed the historical patterns in crypto markets, which he points out have historically adhered to a four-season cycle.

According to Galindo’s cyclical model, several factors mark the end of crypto winter. 

For example, he observed that “a 50% increase in price from Bitcoin’s low is typically a good sign that the trough has been achieved.” In other words, since confidently surpassing the $23,000 mark in March, History suggests that Bitcoin is now safe from collapsing back to the lows of 2022.

Crypto spring, btc price October 2023
Could Bitcoin’s recent rally mark the end of crypto winter?

Looking ahead to sunnier days, Galindo notes that in the past, most of Bitcoin’s price gains occurred after the BTC halving event, a pre-programmed change to the network that reduces mining rewards by 50% roughly every 4 years.

For example, following the 2012 halving, Bitcoin’s price soared from about $12 to over $200 in just one year.

With the next Halving on track to take place in April 2024, Galindo argues that it could initiate the next crypto summer, implying that spring may already have started.

Certainly, excitement surrounding the SEC’s anticipated approval of the first spot Bitcoin ETF could well have helped to precipitate a recent BTC rally, pushing the token’s price above $30,000 for the first time in months.

Bitcoin Market Hangs on ETF Approval

For institutional investors, a US-listed Bitcoin ETF would represent a significant milestone for the cryptocurrency’s path to widespread acceptance, potentially opening the door to investment vehicles such as pension funds that have strict criteria for what type of assets they can invest in.

however, with investors around the world holding their breaths, the US Securities and Exchange Commission has yet to approve a single spot Bitcoin ETF application. But that could change soon

In fact, recent Bitcoin price movements suggest that months of uncertainty surrounding the fate of ETF applications appear to have suppressed the cryptocurrency’s price, which looks increasingly primed to explode if the SEC ends its long-standing resistance to ETFs directly holding BTC.

Consider, for example, that it only took one false report that Blackrock’s ETF application had been approved to spike the price of Bitcoin by as much as 5%. 

In that case, the fund manager soon cleared up the misunderstanding and BTC quickly returned to its previous level. But if even fake news can have such a profound effect on the cryptocurrency’s price, imagine how the market might respond to a confirmed ETF Approval.

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