A widely followed crypto analyst says Bitcoin (BTC) is unlikely to post the same gains as it did during the last market cycle.
In a new strategy session, crypto trader Benjamin Cowen tells Its 842,000 YouTube subscribers indicate that the flagship crypto’s return on investment (ROI) is likely to fall to levels lower than two cycles ago.
“Two cycles ago – so market cycle three – Bitcoin’s ROI at this point in the cycle was about 5.55x. Right now, Bitcoin’s ROI, measured from the low, is 6.1-7x. The last cycle at this point the ROI was 9.9x.
So you can actually see that the ROI is between the last two cycles. It’s quite fascinating how history has somewhat repeated itself. That doesn’t mean it will always stay between those two cycles. In fact, at some point the general expectation should be that it would fall below the third cycle ROI.”
According to Cowen, the crypto king’s returns will stagnate due to its relatively larger market capitalization, causing returns to decline.
“It’s the same as the last cycle, when everyone was busy debating diminishing returns and such, and whether this would actually continue to the end. A lot of people thought so, and you can’t necessarily blame them for thinking so. I mean, at one point the ROI of the last cycle was even higher than the cycle that preceded it, but as we got closer to the end of the cycle you can see that it lagged behind the previous cycle.
I’d say you’ll probably see something similar this time around, where it looks like it’s going all the way, but at some point we’re probably going to get some form of diminishing returns. I mean, to give you an idea, two cycles ago, Bitcoin’s ROI from the bottom was a 100x move. The reason why this is difficult to experience in later cycles is because it takes exponentially more money to move the market.”
Bitcoin is trading at $101,100 at the time of writing, down 1% in the past 24 hours.
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