One of the closely followed analysts of the crypto world, Benjamin Cowenthinks that the dot-com bubble of the late 1990s could provide an important insight into how a possible collapse in the crypto markets could unfold.
Cowen, who posted a new video on his YouTube channel, bitcoinHe talked about what could be worse than the current market conditions, where BTC (BTC) has lost almost 50% from its all-time high.
“If you look at what happened on the NASDAQ in 2000, you can see that it actually experienced an 83% correction. Today, I have news for those who do not like the idea of a correction in the crypto markets or do not think that a correction is possible, this happens every few years…”
Cowen thinks an 80% drop is highly likely for the crypto market.
“You’re going to see an 80% correction, so let’s not assume it can’t happen considering it’s already happened multiple times in the crypto-asset class. The NASDAQ fell 83% before finally finding a macro bottom and then another run and then of course we had the financial crisis that took us to another bottom… Remember, at the time of the dot-com crash, there were still a few bounces in between. It looked like it was bottoming out, but actually it wasn’t.”
At the time of writing, the global crypto market cap was at $1.24 trillion, but if the worst-case scenario were to happen, Cowen thinks the valuation of the new asset class could drop to $500 billion.
“Note that the Nasdaq is down 83% and is down from $3 trillion. Now, where will this put the entire asset class? This would bring the asset class to a market cap of around $500 billion.
Sometimes I have trouble understanding an asset class with a market cap of just $500 billion, but considering the asset class as a whole was $3 trillion a long time ago and we’re now at $1.26 trillion, that’s not that hard. Let’s say we can’t reduce 40% or more to about $500 billion. Its crypto markets I would think it was the absolute worst-case scenario for him.”
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, Koinfinans and the author of this content cannot be held responsible for personal investment decisions.