Crypto analyst Nicholas Merten highlights the potential for turbulent times ahead for the Bitcoin price. In his recent YouTube video on DataDash, Merton discusses how the directional movement of equities and broader assets will directly impact Bitcoin and the cryptocurrency market as a whole. He observes the correlation between the equity market and the crypto market, noting that when the former was on the rise at the beginning of the year, cryptocurrencies also experienced significant growth. However, Merten raises concerns about the relatively quiet equity market and the failure of narratives to drive it higher. He suggests that if major tech stocks like Apple’s, Microsoft’s, and Fang’s fail to pick up, it could pose a substantial problem for the crypto market.
Another significant macro factor Merten emphasizes is inflation data. He expresses his belief that the Federal Reserve (Fed) has not done enough to curb inflation and bring it down to the target of 2%. Merten suggests that the Fed could have taken a more stringent approach by raising rates by 75 basis points or even 100. The inflation rate plays a crucial role in the crypto market, as a higher rate limits investors’ spending power within the market. Merten points out that it is evident the Fed’s efforts have been insufficient, as prices of goods and services, including energy, seem to be increasing. He draws a parallel to the high inflation period of the ’70s and warns that if the current situation resembles that time or follows a similar trend, it could result in a significant problem.
Globalization, Trade Deals, and Inflationary Pressures
Although some may argue that the ’70s were unique in terms of extreme events such as the oil embargo, Merten suggests there are similarities with the current state of global affairs. He highlights the situation with the BRICS countries, which indicates a de-globalization trend and decreasing trust among nations. Merten believes this shift would have inflationary pressures and asserts that the Fed is well aware of this. He explains that the imbalance between supply and demand is a key contributing factor to the re-inflation being experienced. Excess money in the system, resulting from the excessive printing of money during the COVID era and the wealth generated from stimulus checks, has created a situation where purchasing power exceeds available supply.
Considering these macro factors, Merten predicts potential turbulent times ahead for the Bitcoin price and the broader cryptocurrency market. The relation between equities and Bitcoin, coupled with concerns over inflation and global trade dynamics, raises red flags for the market’s stability. Merten suggests that investors should closely monitor the equity market, paying particular attention to the performance of major tech stocks. Additionally, he advises keeping a watchful eye on inflation data, as any indications of sustained high inflation could have adverse effects on the purchasing power in the crypto market.
Nicholas Merten’s analysis reveals a cautious outlook for the future trajectory of the Bitcoin price. The interplay between equities, inflation, and global dynamics presents a complex and uncertain environment for cryptocurrencies. While the future remains uncertain, it is crucial for investors to stay informed and adapt their strategies accordingly to navigate potential turbulent times in the crypto market.