Here’s Why According to DataDash

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Nicholas Merten – a vet­er­an cryp­tocur­ren­cy ana­lyst and founder of DataDash – has called for Bit­coin to sink to $14,000 fol­low­ing its plunge below $19,000 over the weekend. 

The ana­lyst cit­ed both tech­ni­cal and macro­eco­nom­ic fac­tors, includ­ing an indi­ca­tor that he calls “absolute­ly damn­ing” for Bitcoin’s price. 

Deeper Waters for Bitcoin?

In a video pub­lished on Mon­day, Merten point­ed out that Bitcoin’s 200-week mov­ing aver­age (WMA) has turned into a lev­el of price resis­tance, rather than sup­port. The pri­ma­ry cryp­tocur­ren­cy has almost always stayed above the aver­age through­out its exis­tence, with rare descents below it mark­ing cycli­cal bottoms. 

How­ev­er, Bit­coin and cryp­to mar­kets fell below this lev­el dur­ing the cryp­to mar­ket crash in June, which saw Bit­coin plunge to $17,600. It has since ranged with­in the low twen­ty thou­sands – nar­row­ly below the 200 WMA of about $23,000. 

Giv­en its inabil­i­ty to break back above this lev­el, the ana­lyst claimed that Bit­coin is now in “unchart­ed territory.”

“We have not seen these cir­cum­stances ever play out for Bit­coin,” he said. “Usu­al­ly price breaks below the week­ly mov­ing aver­ages, the ral­lies out of it, due to peo­ple buy­ing into the capitulation.”

The founder con­clud­ed that Bitcoin’s recent price action like­ly sig­nals “the end of a decade-long sec­u­lar bull mar­ket” that Bit­coin has expe­ri­enced through­out its life, along­side stocks. As such, he sus­pects that it may no longer be a lead­ing asset com­pared to oth­er com­modi­ties and equities. 

Accord­ing to the ana­lyst, the cryptocurrency’s next bot­tom could be close to $14,000. This would mark an 80% cor­rec­tion from its all-time high, sim­i­lar to pre­vi­ous bear markets. 

“This is the bare min­i­mum we can ask for at this point,” said Merten, adding that investors should con­sid­er the pos­si­bil­i­ty of an even steep­er decline to $10,000. 

The Merge and the Macro

Com­ment­ing on Ethereum’s recent Merge, Merten labeled the upgrade “a clear ‘buy the hype, sell the news’ event.” He expects the sec­ond-largest cryp­tocur­ren­cy to retest the $800 to $1000 lev­el, and pos­si­bly lower. 

Con­tribut­ing to poten­tial declines is the Fed­er­al Reserve’s upcom­ing inter­est rate deci­sion, in which the mar­ket expects anoth­er 75 basis point hike. Hawk­ish mon­e­tary pol­i­cy has coin­cid­ed with major declines in stocks and cryp­to through­out 2022. 

This pol­i­cy has cre­at­ed a high­er cost of shel­ter in the Unit­ed States, includ­ing sud­den ris­es in fixed-rate mort­gages. It’s also caused 2‑year Trea­sury bond yields to invert those of their 10 and 30-year equivalents. 

Despite the poten­tial dan­gers to the econ­o­my this could pose, Merten doesn’t expect the cen­tral bank to stop rais­ing rates until it can con­fi­dent­ly quell inflation. 

“This could very well be depres­sion­ary lev­els of reces­sion,” he said. 

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