Bitcoin has been trading in lockstep with stocks all year. In theory, this should mean that, as equities reached a potential bottom in recent week, the digital currency should have done so as well. Unfortunately, it's not that simple, Morgan Stanley said. Equity strategist Sheena Shah noted that, unlike previous cycles, government stimulus and Federal Reserve monetary policy tightening have driven bitcoin prices up and down. This is similar to what has been seen in equities, and it has contributed to the cryptocurrency's highest correlation to stocks on record over the past six month. Another contributing factor to this correlation has been increased institutional participation in the space. Institutions are more sensitive to the global liquidity environment and central bank policy than retail investors are, therefore they are less likely to hold crypto assets for longer periods of time than retail traders. Many investors believe the S & P 500 found a bottom at the roughly 3,600 level in June. Bitcoin hit a low of $17,601.58 around the same time, falling about 75% from its November all-time high of nearly $69,000. That drawdown for bitcoin is the fourth-largest on record, Morgan Stanley said. But while this decline is steeper than normal for the digital currency, and its correlation to stocks is at an all-time high, it may be too soon to call the bottom. "From these observations it is hard to say whether the bear market is over or that there is more to come," Shah said. "The correlation between bitcoin and the U.S. equity market remains high and both are sensitive to central bank tightening." "For this crypto cycle to find a bottom, we would look for fiat money supply contraction expectations to turn expansionary again or for crypto companies to increase crypto leverage again," she added. To be sure, she also called June 18 a bottom for ether , citing the firm's price adjusted volume per address, or PAVA, indicator. PAVA monitors the extent to which ether prices are driven by price speculation versus its use as a blockchain network. ETH has rallied 100% since that low, or 65% since the indicator triggered a signal, Shah said. CNBC's Michael Bloom contributed reporting.