Morgan Stanley Predicts a Rocky Period for BTC and Crypto

The prices of bitcoin and various other forms of crypto have been doing well these past few weeks. Spikes have occurred that have brought assets like bitcoin to new six-month highs, though Morgan Stanley is now saying that a massive stock crash could come along soon that may bring the prices of these digital assets down.

Morgan Stanley Thinks Things Will Be Rough for BTC This Month

The sentiment for 2023 thus far is that it will be a bullish year. There are several industry heads such as Tim Draper, for example, that think the price of bitcoin is going to reach far beyond what anyone thought imaginable. He has suggested a $250K price for BTC, though at the time of writing, there’s really nothing solid confirming that what he’s saying will occur. One must wonder if this is all wishful thinking given how bad 2022 was.

During the previous year, bitcoin (after hitting a new all-time high of $68,000 per unit) fell into the doldrums and ended 2022 at a measly $16,600. A lot of this could be attributed to the FTX crash and the many bankruptcies that littered 2022, but several other forms of crypto followed in BTC’s footsteps and contributed to the space losing more than $2 trillion in overall valuation.

Michael Wilson – an analyst with Morgan Stanley – recently explained:

We think March is a high-risk month for the next leg lower in stocks. Stocks tend to figure it out a month early and trade lower, and this cycle has illustrated that pattern perfectly. With uncertainty on the fundamentals rarely this high, the technical[s] may determine the market’s next big move.

The good news is that this could just be a case of gloom and doom given researchers with Citi claim the correlation between stocks and crypto has thinned out somewhat in recent years. Thus, it’s safe to assume even if stocks come tumbling down, bitcoin and its altcoin cousins could potentially remain safe.

Not Everyone Is Negative

In addition, some analysts say there are many elements – such as reduced inflation and less aggressive interest rate hikes – that will occur in 2023 that could help bolster crypto even further. Samir Kerbage – chief investment officer at Hashdex – stated in a blog post:

This year’s improving macroeconomic landscape, including rosier inflation expectations and a reduction in the pace of central bank rate increases, has lifted risk assets in general. While we don’t anticipate an ‘up only’ environment for bitcoin in 2023, we are expecting its price to be at a higher level at the end of the year with the requisite volatility along the way.

Just two years ago, Morgan Stanley was so confident in bitcoin and its ongoing price hikes that the company debated as to whether it should get involved in crypto trading.

Tags: bitcoin, Morgan Stanley, Stocks