Here’s the worst-case scenario for bitcoin and crypto markets, according to analyst Benjamin Cowen
Analyst Benjamin Cowen describes a potential worst case scenario for Bitcoin and the crypto markets in general.
In a new video for his 765,000 YouTube subscribers, Cowen looks at the infamous burst of the dot-com bubble for clues about where digital asset markets could end up.
Looking at the total market capitalization of all crypto assets, the analyst says the current pullback could continue to fall to around $760 billion.
At that point, Cowen says a 60% return would be commensurate with a return seen in the dot-com era, bringing the total market capitalization back to the $1 trillion level.
If and when that happens, Cowen says the markets will land in a very difficult place.
“If we get a 60% pullback to a future bottom – let’s say it happens at the end of the year – a lot of people will assume that’s the bottom, and to some extent I’ll probably assume that’s the bottom…
But we should always remember that there are no sure things when it comes to investing, there is always a risk that you are taking on no matter how certain you are that something will pan out.
And if it were to play out like the dot-com bubble, the next low you’d still see from that point would be another 27% drop to the actual bottom.”
If this market structure pans out, the total market capitalization of all cryptocurrencies will finally bottom out at around $500 billion.
Cowen warns that markets are never certain, and says bulls can make a coherent case that the bottom for Bitcoin is already in.
He tells traders that it’s never a bad idea to have some cash on hand in case the markets move lower than you think is likely or possible.
“This is something to consider. It’s the worst-case scenario. I have no idea if it’s going to play out or not, but it’s something that I think everyone should consider as they navigate the cryptoverse.
I think many people have burned before. You need to learn your lesson if you haven’t already and understand the downside risks of cryptocurrency. If we see another leg down, it’s going to surprise a lot of people.”
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