Bitcoin: Analyst Shares Warning – Liquidity Trap Ahead
During Bitcoin's recent bullish price action, crypto strategist Nicholas Merten warned that traders may be jumping the gun.
In a new video, he tells his YouTube subscribers that Bitcoin will likely drop lower in price, resulting in a bull trap for traders that just went long on BTC.
Merten notes that the flagship cryptocurrency has yet to trade and hold support above the 200-week moving average, signaling a liquidity trap is forming at current prices.
Instead of waiting for the price to show strength above the 200-WMA and find support there, people are already going ahead and chasing it.
Merten says that in August, this same supply zone or resistance range was slightly higher, and it “enticed and excited traders.”
While the analyst acknowledges his previous estimates of Bitcoin dipping as low as $10,000 or $12,000 may never come to pass, he predicts the asset could fall to $16,000, a more than 30% decline from its current price.
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Merten explains that institutional investors can trick retail traders and take advantage of them to serve as exit liquidity for positions. He advises traders not to fall for the liquidity trap, saying,
“… they are not waiting for that 200-week support. They’re going ahead and buying in right now. And that’s the big mistake that everyone’s making because that is a liquidity trap, Classic 101 example of how market investors can trick retail traders.”
Despite the warning, Merten believes that Bitcoin could be in a long-term accumulation channel, much like what happened during the bear market in 2014 and 2015. He predicts that Bitcoin may retest down to the $16,000 range, but this could be an opportunity for long-term accumulation for savvy traders.
As with any investment, risks are involved, and traders should always do their own research before making any decisions. It’s important to remember that the crypto market is highly volatile and unpredictable, and traders should proceed with caution.
Andrey Kunev
Reporter at CoinsPress
Andrey Kunev is a knowledgeable cryptocurrency content creator passionate about the crypto market. With extensive experience in market analysis and investment reporting, Andrey is a valuable asset to the CoinsPress team. As a frequent contributor, he offers insightful and comprehensive coverage of market trends, price fluctuations, and new advancements in cryptocurrency. Whether you're a seasoned investor or just getting started, Andrey's clear and concise writing offers a comprehensive look at the current state of the crypto market and its prospects. Stay up-to-date with CoinsPress's expert analysis and commentary on all things cryptocurrency.
