According to a research article published by Morgan Stanley on Monday, Bitcoin is now unfolding like Nasdaq did during dot-com bubble, but it is now estimated to be 15 times faster.
In a note to the client, Morgan Stanley mentioned that the Nasdaq in 2000 and modern-day bitcoin both rallied 250 to 280 percent in their most “exuberant” periods ahead of bear markets.
Sheena Shah, strategist at Morgan Stanley said, “Just that the bitcoin rally was around 15 times the speed”. She added that similar trends in prices and trading volume are a sign enough that the Nasdaq history is coming back into action.
“The Dot-com bubble describes the irrational run-up of speculative investments on Internet related stocks from 1995 to 2000 following the genesis of the World Wide Web and the Web Browser alongside the Commercialization of the Internet. The expression or dot-com comes from the fact that all commercial web sites at the time ended in the “.com” suffix.”
Bear markets are not anew thing in the digital currency market. Since it was created in 2009, bitcoin has seen four of them, with price drops between 28 percent and 92 percent, Shah said. According to data from CoinDesk, Bitcoin’s value has fallen approximately 70 percent from its peak near $20,000 in December to a low in February below $7,000.
Shah portrayed another similarity when she mentioned in each bearish wave, bitcoin prices have lost 45 percent to 50 percent of their value similar to Nasdaq’s behavior 18 years ago.
She said, “The Nasdaq’s bear market from 2000 had five price declines, averaging a surprisingly similar amount of 44 percent,”
Since December, bitcoin trade volumes have jumped nearly 300 percent. But then each rally ahead of the bear markets saw volumes fall.
Shah said. “Rising trade volumes are thus not an indication of more investor activity but instead a rush to get out.”
About the sale of digital tokens like Tether, Shah said
“The coin USDT is not a major funding unit but its increasing use is an interesting development. Over the coming years, we think that market focus could turn increasingly towards cross trades between cryptocurrencies/tokens, which would transact via distributed ledgers only and not via the banking system.”
The Tether company has come under scrutiny, as some are skeptical it actually has $2.2 billion on reserve.
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