Bernstein says crypto industry set to rebound from this latest 'winter,' like it has before

If history is any indication, cryptocurrency prices will rise exponentially when this crypto winter is over, according to Bernstein. Bitcoin ended 2022 at $16,664, a 64% loss for the year and ending more than 75% off its November 2021 all-time high. However, even at current lows, the cryptocurrency is roughly 60% higher than it was in 2014 and five times higher than its lows in 2018. "Prior to 2022, cryptocurrencies have gone through two winters in their 13-year history, and the results of crypto-stress buying have been spectacular," Bernstein analyst Gautam Chhugani said on Monday. “Crypto as an industry has a great track record of fighting back from its lows and taking hits when they are down. In 2014, Bitcoin saw a 58% loss for the year, falling as low as $284 after starting the year at $747. In the following three years, it posted annual returns of 36%, 120% and 1,375%. In 2018, it fell 74% for the year, dropping as low as $3,157 at one point from its starting price of $14,043 for the year. It grew by 95%, 305% and 60% in the following three years. Ether showed a similar recovery. "We believe that cryptocurrencies are probably one of the few industries that can achieve growth similar to frontier technologies in a broadly mature technology environment," he added. “Today, cryptocurrencies touch less than 5% of total internet users and have significant room for app-driven adoption.” This focus on apps is part of a critical shift crypto has undergone in the current cycle, according to Chhugani. The industry has changed since "the early days of 'cryptocurrency'" and is now more focused on applications and utility, he said. He also added that any criticism that crypto apps are "in a speculative feedback loop and therefore we haven't seen any mainstream consumer applications outside of speculation" is "fair" but can be addressed. "Investors should continue to focus on long-term consumer adoption of cryptocurrencies," which "should reflect the growth of the Internet as blockchain applications become more mainstream," he said. "Crypto has 200 million holders today, but around 10 million active wallets per month using apps," he added. "As blockchains and applications scale, we expect the monthly user base to grow 10-100x long-term. We expect gaming, social and digital commerce and NFT-based brands to lead adoption."