Crypto Expert Warns of Bitcoin’s Fragility in Recession
Crypto analyst Nicholas Merten has voiced concerns about Bitcoin's vulnerability in the event of an economic downturn.
Merten suggests that Bitcoin might experience a substantial decline, potentially exceeding 46%, if the Federal Reserve’s adoption of a more cautious monetary policy results in a prolonged economic recession.
In Merten’s analysis, a potential indicator of an impending short-term recession could be a cooling down of commodities such as oil, natural gas, and uranium. He predicts that this development could lead to temporary discomfort, causing equities to revisit their lows, resembling the 33% correction observed in October 2022.
Consequently, Bitcoin may retrace to a similar low range of approximately $15,000 to $17,000. Interestingly, Merten views this as a potential opportunity for a double-bottom formation across various assets.
Looking ahead, Merten anticipates that Bitcoin will only enter a sustained bull market once the Federal Reserve takes action to inject liquidity into the financial markets to support the broader economy.
He observes that there is currently no discernible significant trend in Bitcoin, and the sideways movement from March 2023 to October 2023, combined with difficulty in breaking resistance levels between $28,000 and $32,000, doesn’t align with the characteristics of a bull market.
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Merten emphasizes the importance of patience and suggests that real signs of optimism, particularly related to increased liquidity, are essential for the crypto market.
He notes that liquidity is crucial for assets like Bitcoin, and its performance thrives when there are expansions in the money supply and prevailing risk-on sentiment. Currently, Merten points out that none of these factors are in play.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
