Morgan Stanley compared the recent moves to that of the Nasdaq Composite Index in 2000. According to the report, Bitcoin almost mirrored Nasdaq’s moves but at 15 times the speed. The Nasdaq climbed 278% in a period of 519 days, leading up to its high in March 2000. Bitcoin soared 248% in 35 days in the last peak of the rally to its high level of $19,511 in December 2017.
Since Bitcoin’s peak in December, there have been 3 waves of weakness, with prices falling between 45% and 50% each time, before rebounding. The bear market of Nasdaq from 2000 had 5 price declines of a similar 44% on average.
Further, the bear market looks the same on the way up. There have been 2 Bitcoin bear market rallies averaged 43%, while the Nasdaq bear market rallies 40% on average.
Bear markets are not something new for the first decentralized cryptocurrency. Since Bitcoin’s creation in 2009, there have been 4 bear markets and its price declines were ranging from 28% to 92%. From the coin’s peak in December to February’s recent low, Bitcoin’s price fell by 70%. Morgan Stanley described this move as nothing out of the ordinary.
The previous bear markets of Bitcoin have last about 5 months, after rallying for 2 to 3 months. Sheena Shah, who is Morgan Stanley strategist, said that the variability of each of the bear markets and the small number of historical examples make it difficult to assume that the current bear market might take the same time period.
Rising Trading Volumes
According to the report, all the past Bitcoin’s bear markets have seen rising trading volumes, while rallies prior to the majority of bear markets have seen falling trading volumes. Since December, Bitcoin trading volumes have risen by about 300%.
Sheena Shah claims that the rise in trading volume is a bad indicator. As Mr. Shah wrote, the rising trade volumes are indicating more investors’ activity but a rush to get out instead.