In a recent strategy session that has sent ripples through the crypto community, Nicholas Merten, a highly respected crypto analyst and the host of DataDash, is sounding the alarm bells. Merten, who commands a subscriber base of 512,000 on YouTube, is issuing a stark warning: the entire market capitalization of cryptocurrencies, including Bitcoin (BTC), could be on the verge of a colossal collapse.
Merten’s analysis paints a grim picture, suggesting that the total crypto market cap may plummet by an astonishing $440 billion from its current valuation. Additionally, Bitcoin itself could experience a gut-wrenching drop of more than 43% from its present price.
He outlines what he believes to be a best-case scenario for those already invested in the crypto market. According to Merten, investors should brace for the possibility of finding support around the $650 billion market cap range for the broader digital asset market. For Bitcoin specifically, this support might manifest in the price range of $15,000 to $16,000.
At the time of Merten’s analysis, the total market capitalization of digital assets stood at $1.092 trillion, with Bitcoin trading at $26,584. However, this alarming prediction has cast a shadow of uncertainty over the crypto landscape, with Bitcoin experiencing a 0.8% decrease in the past seven days.
Merten attributes his bearish market cap forecast to further liquidity contraction, driven by the Federal Reserve’s continued hawkish stance. This tightening monetary policy is also contributing to the underperformance of traditional stocks, exemplified by declines in tech giants like Microsoft and Apple.
Merten elaborates on this point, highlighting the adverse effects of rising bond yields and a scarcity of the U.S. dollar on the cryptocurrency market. He questions whether investors will flock to Bitcoin in a climate of heightened economic uncertainty and volatility.
While some argue that Bitcoin’s halving event and capped supply make it an attractive hedge, Merten suggests that Bitcoin tends to shine not during periods of monetary contraction but rather in times of monetary expansion when new money and credit are injected into the economy.
As Merten’s cautionary words reverberate throughout the crypto sphere, investors and enthusiasts alike are left to ponder the future of the market and the potential ramifications of a substantial contraction in the total crypto market cap.