A popular crypto analyst says that predictions of a Bitcoin (BTC) euphoric rise or an epic crash are both unlikely and that BTC may need to experience some pain before it can reach new all-time highs.
In a new strategy session, Nicholas Merten tells his 489,000 YouTube subscribers that he does foresee Bitcoin achieving a valuation of $200,000 late next year, but not before further tests of crypto investors’ mettle.
“What we are likely going to get is a rally to $200k somewhere in late 2022, but before we get that there’s a very good chance that we could roll over, that this [recent rally] is nothing more than a dead-cat bounce and that we are going to have to see more pain in the streets.
We need to see more pain in the crypto markets before we move higher.”
The DataDash host takes a look at the monthly chart to support his claim that Bitcoin’s recent upward price action was more likely a “dead-cat bounce” than proof that a major rally had begun.
“If you look at various exchanges, different volume data, the volume and the pullback we’re seeing here is equitably on par with what we saw back on the long side.
In the daily, the vast majority of this supposed rally in price or major breakout has back pulled now, and just within a matter of a couple of hours.”
Merten says that he’s not feeling bearish about the crypto markets. He cites one key metric from previous bull runs, indicating how and why Bitcoin will rise next year.
“I think we’re seeing right now is something that has happened before in Bitcoin’s history during this bull market. It is one of the defining factors as to how this market is operating, utilizing massive amounts of leverage in order to drive each and every wave of the cycle.
If you look at a lot of the on-chain metrics, if you look at the number of new wallet addresses on-chain, if you look at the amount of wallet addresses holding a certain amount of Bitcoin.
Most of these major market metrics are not indicative of a major new wave of users coming into the crypto space.
What’s really been driving these rallies in value are the leverage platforms.
Crypto borrowing and lending platforms where you can basically borrow stablecoins or dollars from your crypto assets…
And that has been a big reason why each and every time we revisit these general previous highs after a long extended consolidation period, we’re getting these major breakouts.”
Bitcoin has had a rocky month, falling off a cliff from over $57,000 to under $47,000 on December 3rd into the 4th. The leading crypto asset has since recaptured $50,000 several times but has been unable to hold that key level.
At time of writing, BTC is down 2.9% on the day to $46,743.
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