At least that is the thesis from Morgan Stanley this morning.
Bitcoin has long been compared to the dotcom bubble and Morgan Stanley says they are now seeing some very strong parallels, except they are happening a lot faster.
How much faster you might be wondering?
Try 15 times faster!
Some numbers to ponder on:
The Nasdaq took 519 days to reach it's high in March of 2000. The index ran up 278% over that time.
Bitcoin took 35 days in the final leg of it's rally to get near $20k. The coin ran up 248% during that time.
The chart comparing the two moves can be seen here:
The Nasdaq can be seen in blue while bitcoin is the gold colored line.
As you can see there certainly is some similarities in the resulting price action, both in terms of the runup and also on the way down.
However, the similarities don't just stop there...
According to the report, there have been 3 waves of weakness in bitcoin since the peak, each one between 45%-50%.
The Nasdaq had 5 waves of weakness during it's draw-down, each one averaging about 44%.
Also the bitcoin has had two major rallies during this downtrend, the average being about 43%.
The Nasdaq averaged 40% rallies during it's draw-down.
More on the report from Morgan Stanley can be found here:
What does this all mean?
Taking all of this into account, and if bitcoin were to mirror what the Nasdaq did, it would mean Bitcoin still has two more waves of selling before it reaches it's ultimate "bottom".
However, would that also mean that bitcoin will go on to make new highs 15X faster than the Nasdaq did?
The Nasdaq took 15 years from the time it peaked until that peak was eventually overtaken.
By the logic put out by Morgan Stanley, that would mean we could expect to see Bitcoin make new highs about a year from it's peak.
Which would mean...
Bitcoin would be making new highs around December of this year.
Which, ironically would also correspond with what many market forecasters, including Tom Lee, have been calling for.
One more tidbit...
In general, Bitcoin bear cycles last about 5 months and bitcoin bull cycles last about 3 months.
If that were to repeat, we would expect to see Bitcoin start gaining some bullish traction again around May of this year.
To sum everything up:
Bitcoin could ultimately have two more waves of selling before it makes it's low, followed by a bull run middle of this year, followed by a correction, followed by new all time highs by December.
I like it!
Thanks Morgan Stanley.
Stay informed my friends.
Image Source:
http://www.ethereumwiki.com/bitcoin/morgan-stanley-bitcoin-better-than-gold/
