Here is the Worst Case Scenario for Crypto, According to Benjamin Cowen
Crypto analyst Benjamin Cowen is raising the alarm of a potentially significant downturn in the crypto markets.
Cowen is identifying similarities between the current crypto market collapse and the tech stock collapse in the dot-com era.
He points to Nasdaq’s performance during the dot-com era. He uses the market rally and declining percentages from that period to indicate where the total market cap for Bitcoin and other cryptocurrencies could be heading.
According to Cowen, the total market cap of all crypto assets may witness one more capitulation phase, similar to what happened to Nasdaq in 2022 when it crashed by about 30% before bottoming out.
He predicts that the worst-case scenario for the crypto market would be a market cap of $400 billion to $500 billion for the entire asset class. This would represent a decline of over $460 billion in cryptocurrencies, as the total market cap at the time of writing is $966 billion.
Cowen notes that the dot-com crash from its peak occurred over two-and-a-half years when the Nasdaq dropped by 83%. He warns that a similar fall from the peak of the crypto markets could also bring the total market cap down to the $400 billion to $500 billion range.
However, Cowen emphasizes that he is identifying a worst-case scenario, and it’s still possible that the bottom is already in. He says that there’s always a chance that the market won’t have to play out in the worst-case scenario.
Nonetheless, Cowen’s warning underscores the volatility and unpredictability of the crypto markets, and his analysis may prompt investors to exercise caution and consider their risk tolerance.