Crypto Long & Short: Six signs a crypto winter is ending

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This is your institutional newsletter, Crypto Long & Short. This week:

by Denny Galindo, CFA, executive director, Global Investment Office, Morgan Stanley Wealth Management

Digital assets have, from our limited historical observations, typically followed a four-year cycle. Each of the four completed cycles has included a three-year bull market followed by a 12- to 14-month bear market, often dubbed crypto winter. It’s unclear why this cycle persists, but there are reasonable top-down and bottom-up explanations. Fortunately, we do not need to know which cause of the cycle is the most important. Our framework for understanding the four-year cycle features four “seasons” of cryptocurrency. The current crypto winter has largely followed the historical pattern, but our focus has recently shifted to the next season.

Historically, in limited observations, “crypto spring” has begun quietly, with prices stabilizing while public interest remains subdued. Several indicators that have historically marked the transition from crypto winter to crypto spring appear present today. These observations are not predictions, and these may prove false or premature signals, but each sign is worth monitoring in the months ahead.

1) Cycle length: Spring has historically begun 17 months before the supply halving or 12 to 14 months from the prior peak. September is 17 months before the next halving and 11 months from the prior peak.

2) Exchange and institutional stress: Major exchanges have failed or closed just before crypto spring begins. BitMEX announced in July that it would close in September.

3) Drawdowns of 77% to 84% below prior peaks: Bitcoin’s drawdown of 53% (Bloomberg price data from October 6, 2025, to June 30, 2026) may be sufficient to count as a sign, but remains shallower than those of previous crypto winters.

4) Bitcoin difficulty: An indicator of how hard it is to mine a bitcoin, difficulty typically declines at the end of a crypto winter and then increases to mark crypto spring. While difficulty has declined, it has not yet rebounded.

5) Thermocap multiple: The thermocap multiple is a measure like price to book that compares bitcoin's market capitalization to the cumulative dollar value ever paid to miners, with each coin valued at its market price when it was mined. Prior crypto winters ended at single-digit multiples, but this cycle it only declined to 13 times, according to Glassnode data as of June 30, 2026. These levels are not a guarantee of future price action.

6) Price action: A 50% rally from the low has historically coincided with prior market troughs, although no such relationship guarantees future outcomes.