Morgan Stanley Warns Bitcoin Unfolding 15 Times Faster Than Nasdaq's 2000 Crash

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Bitcoin is unwinding in a similar fashion to the Nasdaq during the dotcom bubble nearly two decades ago, but the pace is 15 times faster, global investment firm Morgan Stanley said.

The firm's strategist Sheena Shah said in a client note that the Nasdaq in 2000 and Bitcoin now, both rallied 250 to 280 percent during their peaks ahead of a market downturn.

However, the bitcoin rally was around 15 times the speed, the strategist added.

Price and volume trends also mimic those of Nasdaq from 2000, Shah noted.

Bitcoin has witnessed four bear markets since its creation in 2009 with price drops between 28 percent and 92 percent, the strategist said.

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In recent months, the leading cryptocurrency fell nearly 70 percent from its December peak of around $20,000 to as low as $7,000 in February, which Shah said was "nothing out of the ordinary". She also pointed out that prior bear markets have lasted about five months on average.

This implies Bitcoin prices fell between 45 percent and 50 percent during each downturn in the market.

That is similar to Nasdaq from 2000 which had five price declines, averaging roughly 44 percent each, Shah said.

And trade volumes have fallen for follow-up rallies in both Bitcoin and the Nasdaq, the strategist observed.

"Rising trade volumes are thus not an indication of more investor activity but instead a rush to get out," Shah wrote.

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