Popular YouTube crypto analyst, Benjamin Cowen, has been considering the logarithmic regression band for the total cryptocurrency market cap in his latest video, and based on his analysis, thinks that the total digital asset market cap could hit $10 trillion during the next bull run.
What’s A Logarithmic Regression Band?
While it may sound like AI-generated musicians for psychotherapists to relax to, the logarithmic regression band is actually the range of values to which the crypto market tends to fall back when it is not in a bubble. It is represented by the green band on the chart below.
The line forms a smooth curve overtime when plotted against a logarithmic value scale. At the peak of the 2017-2018 bubble/burst cycle, the total crypto market cap came very close to $1 trillion. However, it has since fallen back to the regression band and currently stands at around $290 billion.
Diminishing Returns Each Crypto Market Cycle
Plotting the difference between the total market cap and the lowest point of the regression band over time shows that the peak levels are becoming lower with each market cycle. This supports the theory of diminishing returns over time.
Assuming this behavior continues, we can project a potential peak level above the regression band for the next major bull run. As an example, Cowen projects this happening in 2022, but of course, it could be earlier or later than this, if it happens at all.
The potential outcome of this would be a total cryptocurrency market cap of around $10 trillion at the peak of the next bubble. In this scenario market cap is likely to oscillate within the regression band for a while before starting its climb.