Crypto Undervalued by 62%, But Analyst Warns of Further Drop

Crypto market analyst Benjamin Cowen warns that despite being at its cheapest since 2010 relative to its long-term trend, the current low point is not yet in. According to Cowen's logarithmic regression trendline, the total crypto market cap is currently valued at $2.152 trillion, while fair value stands at $5.737 trillion, leaving crypto 62.49% undervalued. This marks the largest gap between market cap and fair value in the asset class' history.

The current valuation is the cheapest since September 20, 2010, when it stood at 32.72%. Cowen notes that fair value continues to rise over time, which means the discount could deepen even if prices move sideways. Additionally, recent coldcard hacks and fading retail interest add to the pressure.

Cowen points to midterm-year seasonality and rising bond yields as likely triggers for a potential drop in crypto. He notes that historically, weakness has arrived in early August 2018 and mid-August 2022, and expects one more leg down in the third quarter. The current price of Bitcoin (BTC) stands at $62,648, down 45% over the past year and 27% year-to-date.