A longtime bitcoin investor and leading crypto analyst says the current volatility in the market significantly mirrors the conditions around the Nasdaq composite market in the early 90’s.
Hedge fund manager and Editor at the Palm Beach Research Group, Teeka Tiwari says he finds himself dealing with a lot of the same issues now in crypto, as he did with Nasdaq in 1990’s. Tiwari was an active player in the dotcom era, he boasts of more than 25 years of experience in Wall Street investment and he is a regular contributor on FOX, ABC and CNBC.
Tiwari refers to this relationship as the “Analog” because according to him, today’s crypto market is 87% correlated to Nasdaq of 1990, explaining that what appears to be a poor understanding of the future potential of the blockchain technology is affecting the current valuation of crypto assets, in much the same way, the average person couldn’t foresee that we would interact and depend on information technology the way we do today.
“A lot of the same issues that I deal with now in crypto, I dealt with in 1990. In 1990, you’ve got to remember how new technology was. The average person did not have a desktop computer in their home. Very few people had cell phones. The average person didn’t interact with technology the way we did today. The idea that, one day, everybody would have a phone in their hand and a desktop computer at home was ludicrous. You’ve got to remember—if you were around back then—how analog the world was.”
Tiwari said even though back then in 1990’s he was only a 19-year and largely inexperienced investment trader, but he knew the wave of information technology was going to change the world. Nevertheless, it was sometimes difficult to explain this to his clients as the market prices didn’t always seem to correlate with his valuations.
He notes that the Analog is no crystal ball but maintains that it’s been incredibly accurate at predicting market movements.
“What we’ve found is that the current crypto market is tracking the Nasdaq of the early ’90s to about an 87% rate. So, it’s highly correlated to what I saw back in 1990.”
Nasdaq eventually went on to explode in value from $322 in 1990 to over $5,000 in 1999 and today it hovers at over $1,000.
Tiwari is confident the crypto market is yet to hit reach its full potential. He forecasts a multitrillion-dollar cryptocurrency market in the near future with the eventual entry of institutional capital. He adds that cashing out of the crypto market in hurry based on current realities would prove to be a massive mistake for investors.
He says the current slide in crypto prices is nothing new, pointing out that the market has experienced no fewer than four major price volatility since 2016, but every single time prices went on to rebound to new all-time highs.
The crypto market has endured some especially difficult times in the last 6 months. Prices of digital currencies took a heavy plunge in late December 2018 just days after hitting an all-time high of $19,783 on the 17th of December.
In the days leading up to 2018, bitcoin’s price fell below $11,000, with the cryptocurrency losing more than 30% of its value, consequently shaving billions of dollars off of the total cryptocurrency market capitalization.
At the turn of the new year, the price of bitcoin held steady, hovering around $10,500-$11,000 per coin. But by February, prices fell further to below $9,000. Analysts say this was sparked by concerns about coming government regulations in South Korea, U.S. and China in addition to suspicions over a possible price manipulation prompting a massive selloff.
Crypto investors and enthusiasts have seen their resolve to remain in the market tested to its limits as prices have struggled to reach anywhere near its peak of $19,000 despite several predictions of a coming price recovery.