Morgan Stanley Says Bitcoin’s 50% Correction Is Nothing New

The slide is within historical norms, the bank’s analysts said.

AccessTimeIconJan 31, 2022 at 10:25 a.m. UTC
Updated May 11, 2023 at 4:50 p.m. UTC

Bitcoin's 50% drop from November's record high is nothing new and the correction is within historical norms, Morgan Stanley said in a research note entitled “State of the Bear Market.”

Estimating the fair value of cryptocurrencies is difficult because they trade in a speculative manner, helped by the large availability of U.S. dollars and central bank liquidity, the bank’s head of cryptocurrency research, Sheena Shah, wrote in the report published last week.

If bitcoin trades below $28,000 the market may expect further weakness as this is around last year’s lows. On the upside, $45,000 is the level to watch because that would suggest the recent downtrend may be turning around, the report said.

The bank notes that bitcoin has witnessed 15 bear markets since its creation in 2009, and the correction seen in recent months is within the range of what has happened before.

“Until bitcoin is commonly used as a currency for goods and services transactions (in the crypto or non-crypto world), it is hard to value bitcoin on fundamental demand beyond the asset speculation,” Morgan Stanley said.

Crypto investors may need to be patient if we are in the middle of a bigger risk market correction, the bank said. Alternatively, leverage in the crypto market would need to rise for a bullish trend to begin as central bank liquidity is removed, it said.

Regulation, non-fungible-tokens (NFT) and stablecoin issuance are areas to watch in the coming months, according to the note.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Author placeholder image

Will Canny is CoinDesk's finance reporter.

Read more about