Extensively adopted crypto analyst Benjamin Cowen is figuring out a worst-case state of affairs for the crypto markets as costs spiral downward.
In a brand new technique session, Cowen tells his 784,000 YouTube subscribers that the crypto markets may surrender a whole bunch of billions of {dollars} in a correction just like the dot-com collapse.
“There are lots of similarities between the tech inventory collapse again within the dot-com period and the crypto collapse that we’re seeing at the moment.”
Cowen appears on the efficiency of the Nasdaq through the dot-com period and attracts parallels to at the moment’s crypto markets. He makes use of the market rally and decline percentages from the dot-com period to point the place the entire market cap for Bitcoin and different cryptos might be heading.
In line with the analyst, the entire market cap of all crypto belongings could also be able the place it witnesses yet another capitulation section, just like what occurred to the Nasdaq in 2022 when it crashed by about 30% earlier than bottoming out.
“The place would it not put [the total crypto market cap] if we went 30% decrease beneath the prior low? It will put the entire market cap at round $500 billion, which represents a large correction from the present ranges. That’s 30% beneath the prior low. From the present ranges, that might symbolize one other 40% to 50% correction. And once more, we all know that these percentages are topic to slight adjustments prefer it’s not going to be actual. So perhaps it might be 40% down from right here if it’s going to comply with it. Or perhaps it might be 50% down and get you nearer to $400 billion…
I believe the worst-case state of affairs for crypto could be someplace round a $400 billion to $500 billion market cap for all the asset class.”
A decline to a $500 billion market cap would evaporate greater than $460 billion in cryptocurrencies. The entire market cap at time of writing is $966 billion.
Cowen additionally says that the dot-com crash from its peak occurred over a two-and-a-half-year interval when the Nasdaq dropped by a complete of 83%. He says an identical fall from the height of the crypto markets would additionally carry the entire market cap right down to the $400 billion to $500 billion vary.
The crypto analyst notes that he’s figuring out a worst-case state of affairs, and it’s nonetheless potential the underside is already in.
“There’s all the time an opportunity that the underside is in, and that it doesn’t need to play out within the worst-case state of affairs.”
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