Bitcoin continued its New Year’s climb over the weekend to its highest level since mid-August. However, there are likely still a few bumps to endure before investors come out of this crypto winter. That’s an observation on the current crypto rebound that Bernstein analysts made in a note to investors on Monday. They called it a mean reversion rally, which means they see bitcoin prices returning to their average or long-term average level. “We believe the crypto’s mean reversion still has some room to maneuver,” analyst Gautam Chhugani said in the note. “Bitcoin in their entire 14-year history has never had two consecutive years of negative returns. So we would be cautious to be bearish here. But is this the start of another sustained rally? Unlikely.” Bitcoin touched $23,333.83 on Saturday, according to Coin Metrics. It was its highest level since August 19 – after much of the damage from Terra’s demise and the bankruptcies of Three Arrows Capital, Celsius and Voyager, but before Federal Reserve Chairman Jerome Powell’s speech in Jackson Hole and the collapse of FTX. After ending 2022 down more than 60%, bitcoin is already up 39% since the start of the year. Ether is up almost 36%. BTC.CM = 6 million mountain bitcoins Nevertheless, Chhugani attributed the recent rebound to capital already present in the crypto industry, namely the “shelved stablecoins” being rolled out. He said there had been “no new capital allocations to support this rally”. Furthermore, the market “lacks a clear innovation theme” to attract new capital, although there are some contenders, the analyst added. “DeFi could start growing with the integration of real-world assets or NFT gaming teams could start delivering early alpha builds of their video games,” Chhugani said. “We would wait to see what innovation themes would drive a new cycle, but we would continue to urge bears to be cautious, not to push the pessimism of 2022 too far.” As the crypto asset class becomes “more regulated,” Chhugani expects to see institutions taking crypto positions this year, he said. More positive regulatory developments in Hong Kong could reassure institutional investors, the analyst added. – CNBC’s Michael Bloom contributed to this story.