Morgan Stanley explained why Bitcoin is falling

Morgan Stanley Bank analysts have published a review in which they examined the situation with bitcoin and cryptocurrencies in general and explained the downward trend in the crypto market over the past few months.

The main reason for the growth of the digital currency market in recent years, the bank called the soft monetary policy and state stimulation measures. Experts stressed that the current decline in the market is quite logical, since now investors expect a tightening of monetary policy in 2022, in particular, from the US Federal Reserve.

Morgan Stanley also noted that there is not only a close relationship between monetary policy and the evolution of bitcoin and cryptocurrencies, but also a correlation between the evolution of the money supply as a whole and bitcoin. Analysts stressed that the annual change in the money supply peaked in February 2021, and the annual growth rate of bitcoin peaked a month later, which is not accidental. 

Speaking about the future of bitcoin and cryptocurrencies, the bank believes that the stock market is a much better indicator than gold. Over the past 6 months, there has been a positive correlation between bitcoin and the stock market, while there was an inverse correlation between gold and bitcoin in the period from August 2020 to March 2021 (the price of gold fell and the price of bitcoin rose). Thus, crypto investors should pay more attention to stocks than gold prices.

By the way, 13 years ago, on January 12, 2009, the creator of bitcoin under the pseudonym Satoshi Nakamoto made the first transaction in cryptocurrency, sending 10 BTC to cryptographer Hal Finney.