Coin Edition -
- Benjamin Cowen said that boring summers are not unheard of in crypto.
- The total crypto market capitalization is currently undervalued.
- The trends of overvaluation and undervaluation are common in the crypto space.
Benjamin Cowen, CEO of crypto education platform IntoTheCryptoverse, recently discussed the current crypto market landscape, stating that a “boring” summer is not uncommon in the digital asset sector. The analyst highlighted that last summer also saw a similar period of relative inactivity.
In a YouTube video, Cowen acknowledged that as of July 1, 2024, the total cryptocurrency market capitalization stands at a healthy $2.33 trillion. However, this figure remains 14.72% undervalued against the fair value logarithmic regression trend line, which hovers around $2.74 trillion.
This trend line (red in color) illustrates the market’s historical highs and lows. The green lines at the top and bottom, shown in the image below, represent the boundaries of overvaluation and undervaluation.
Cowen noted that the market is currently undervalued, but this is not unprecedented. A look back at 2017 reveals a similar pattern: a long consolidation phase followed by a sudden surge above the trend line. A similar situation occurred in 2019, when the price action went above this red line, then fell back, then surpassed it again in 2020, and then fell back once more.
When the red line breaches the overvaluation territory, a pullback typically follows, signaling a correction. This was evident in 2011, 2012, and 2016, where overvaluation was swiftly followed by a pullback, as seen from the chart below.
Cowen advised investors not to worry over the current undervaluation, adding:
“So a lot of times you’re not really seeing that durable overvaluation occur until sometime late in the halving year or in the first half of the post halving year.”
Notably, at the time of writing, Bitcoin has reclaimed the $63,000 price level, jumping straight from the $60,000 price level over the weekend. According to CoinMarketCap, the total crypto market cap jumped 3.65% in 24 hours.
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