In a research paper titled “State of the Bear Market,” Morgan Stanley analysts downplayed bitcoin’s 50% loss from it’s all-time high in November, citing metrics that demonstrate the decrease was within historical averages.
Sheena Shah, the bank’s head of cryptocurrency research, noted that assessing the fair value of cryptocurrencies is challenging due to their speculative nature and reliance on massive amounts of US dollars and central bank liquidity. The analysts added in the letter that if the price of bitcoin falls below $28,000, the market may see further downturn. On the plus side, the $45,000 mark is a price to keep an eye on because it would indicate that the current decline has reversed.
Notably, according to a chart from cryptocurrency data provider CryptoCompare, BTC’s previous downtrends have recovered after reaching its fifth Fibonacci retracement level, which is currently around $28,970. In their analysis, the bank’s researchers noted that BTC has seen 15 bear markets since its inception in 2009, and that the present drop is within the range of its previous performance.
Investors may need patience if we are in the midst of a broader risk market correction, with leverage in the market required for a bullish trend to begin once central bank liquidity is eliminated, according to the analysts. Regulation, non-fungible tokens (NFTs), and stablecoin supply are all crucial topics to watch in the coming months, according to the study.
So, what are you going to do with Bitcoin? Buy or Sell?
