Well-regarded crypto analyst Benjamin Cowen says the dot-com bubble of the late 1990s offers a glimpse of what the bottom for the crypto market might look like.
In a new video, Cowen tells his 738,000 YouTube subscribers the possible worst-case scenario for crypto amid the current slump, where Bitcoin (BTC) fell by more than half of its all-time high.
“If you look at what happened to the Nasdaq in 2000, you can see that it actually corrected about 83%. this is a correction of 83%. Well, for people who don’t like the idea of crypto-correction or don’t believe it can happen, I assure you it can and it seems to happen every few years.”
Cowen says an 80% drop is very likely for crypto.
“You’re going to see an 80% correction, so for now, we’re not assuming that can’t happen considering it’s in the US asset class cryptocurrency has happened several times. The Nasdaq crashed 83% before finally finding a macro bottom and then making another run and then of course we had the financial crisis which took us to another bottom… Remember during the dot com crash there was always several more jumps in between made it look like it was a bottom, but actually it wasn’t.”
At the time of writing this article, the global cryptomarket capitalization $1.24 trillion, but a worst-case scenario could see the new asset class’ valuation drop to $500 billion, according to Cowen.
“Remember the Nasdaq is down 83% from above, 83% and it’s down from about $3 trillion. Where would that take the entire asset class? TThat would bring the asset class to a market cap of around $500 billion.
Sometimes I have a hard time understanding an asset class that only has a market cap of $500 billion, but when you consider that the asset class as a whole was $3 trillion not so long ago and we’re currently at $1.26 trillion, isn’t that far-fetched, let’s assume we can’t drop another 40% to about $500 billion. I would rate that as the absolute worst-case scenario.”
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Source: Crypto News Deutsch