Broadly-followed crypto analyst Benjamin Cowen says the dot-com bubble within the late Nineties is giving a glimpse of what the underside might appear like for the crypto market.
In a brand new video, Cowen tells his 738,000 YouTube subscribers the doable worst-case state of affairs for crypto amid the present dip that noticed Bitcoin (BTC) dropping by greater than half of its all-time excessive.
“In the event you take a look at what occurred with the Nasdaq again within the 12 months 2000, you may see that it truly corrected about 83%. That is an 83% correction. Now, for individuals who don’t like the concept of crypto correcting or they don’t assume that it will probably occur, I guarantee you it will probably occur and it appears to occur each few years.”
Cowen says that an 80% drop is extremely doable for crypto.
“You’ll see an 80% correction, so let’s first not assume that it will probably’t occur contemplating that it’s already occurred within the cryptocurrency asset class a number of occasions. The Nasdaq crashed 83% earlier than in the end discovering a macro backside after which happening one other run after which we had the monetary disaster after all which led us to a different backside… Bear in mind, through the dot-com crash, there have been nonetheless a number of bounces in between that made it look like it was a backside, but it surely truly, in actual fact, was not.”
At time of writing, the worldwide crypto market cap is $1.24 trillion, but when the worst-case state of affairs occurs, Cowen says that the valuation of the brand new asset class might drop to $500 billion.
“Keep in mind that Nasdaq 83% dropped from the highest, 83% and it dropped from round $3 trillion. Now, the place would that put your entire asset class? That would put the asset class at round a $500 billion market capitalization.
Generally I battle to understand an asset class that has solely a market cap of $500 billion, however contemplating that the asset class as a complete was $3 trillion not that way back and we’re presently at $1.26 trillion, it’s not that far-fetched to imagine that we will’t drop one other 40% or so all the way down to roughly $500 billion. I might think about that to be absolutely the worst-case state of affairs.”
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