Bitcoin and altcoin market rebounded while total market cap recaptured $2 trillion. However, given the parallels between the dot-com boom in 2000 and the current crypto market, one expert believes a bear call is appropriate. We have compiled the analyst’s conclusions for Kriptokoin.com readers.
Could Bitcoin drop 80% like early internet company shares?
According to recent research, the adoption curve of cryptocurrencies is comparable to that of the internet in the early 1990s. However, one analyst predicts that as a result of speculative investments and the flooding of capital markets supporting dotcom businesses that ultimately fail to profit, the crypto market will drop roughly 80%, as the Nasdaq did during the dotcom bubble in 2000.
Cryptocurrency analyst Tasha Che offered an opinion on Twitter estimating the probability of the crypto market entering a long bear market with a similar drop to the Nasdaqs in the 2000s. Che talks about the following key parallels.
- By the year 2000, the internet had 413 million users. Meanwhile, 10% of working-age internet users, or about 6% of the global population, own some form of cryptocurrency, according to GWI statistics.
(
on the market)
(
<
div>7) (real use bothx10907107) It has seen a multi-year bull run as a result of the hype around “breakthrough technology” that is little supported by its scenarios.
- According to Bloomberg, before dropping to $1.2 trillion at the end of the year, the Bloomberg Internet Index “Bloomberg Internet Index was $2.9 trillion in 2000 (approximately in today’s money). reached a peak value of $3.5 trillion. “A market cap of $2.5-3 trillion would have brought crypto at the same pace as dot-com valuation back then,” Chen says.
Expert concedes that “history does not repeat itself” because it is not a “bear call”, but believes it is “in the cards” given the circumstances. The missing factor is a bluff top, defined as “a strong increase in price and volume, followed by a rapid drop in price and again a drop in high volume.” Chen believes that “we will definitely see a repeat of history” if the boom peak happens in the next few months, with the $3 trillion crypto returning to its market cap level.
Contrasting point of view
Other commentators, however, argue that Chen’s data shows an approximately 5-fold increase in M2 money supply, from $4.6 trillion in 2000 to $18.45 trillion in 2020. Another Twitter analyst pointed out that crypto speculation could be considered a “parallel liquid market,” while pointing out that the two markets may not be systematically related, except in mood, given that Internet speculation in 2000 fueled an extremely inflated market.
It was also mentioned that Bitcoin (BTC) is a unique example as assets are more reactive. According to analysts, price increases may lead to increased use, while at the same time causing an increase in consumption. The dotcom bubble, on the other hand, had little effect on internet usage, as “no one needed to acquire AMZN stock to use Amazon.”
16688
