March 20th 2018

According to a study published by financial conglomerate Morgan Stanley, bitcoin behaves exactly like Nasdaq during the dotcom bubble 20 years ago. Only by time now everything is unfolding much faster.

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The movement of prices in the Nasdaq index in 2000 and bitcoin these days in the most turbulent periods reached 250-280% in front of the bear market, Morgan Stanley said in a note to clients.

“Only bitcoin rally was about 15 times faster,” said bank strategist Shina Shah.

According to her, such price movements and similar behavior in the trading volume can be signs that the history of Nasdaq is repeated.

Bear markets for bitcoin since 2009 were observed four times, the price drop with them was from 28% to 92%, Shah reminded. On average, the price of crypto currency lost on each bearish wave of 45-50%, which is very similar to the behavior of Nasdaq 18 years ago.

“In the bear market of Nasdaq since 2000, there have been five price cuts, surprisingly, on average by the same 44%,” said strategist Morgan Stanley.

She drew attention to the fact that at each rally in front of the bear market, there was a fall in trading volumes. But in bitcoin this indicator has jumped by 300% since December, and it does not see a favorable signal for crypto currency.

“The subsequent rally for both bitcoin and Nasdaq has always meant a fall in trade volumes. The growth of trading volumes, therefore, is not an indicator of the increased activity of investors, rather, they are in a hurry to get out, “Shah said.

Historically, three major currencies were used to buy bitcoin: the US dollar (USD), the Chinese yuan (CNY) and the Japanese yen (JPY). At the last bear market, a new share of the currency was absorbed by the new digital currency, called Tether (USDT).

“The USDT token is not the main financial unit, but its growing use is an interesting story. We think that in the coming years the focus on the market may shift more and more into cross-transactions between crypto-currencies / tokens, and these transactions will be carried out only through distributed registries, and not through the banking system, “Shina Shah believes.

Recall that the Commission on Commodity Futures Trading (CFTC) previously sent summonses to the courts of Tether and Bitfinex, which are linked. The creators of USDT assure that all tokens are provided with US dollars in relation to one to one. But in the crypto community, fears have long ago been voiced that companies really do not have about $ 2.2 billion of funds needed for this.

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