Widely followed crypto analyst Nicholas Merten says there’s one more big sell-off event on the horizon for Bitcoin (BTC).
In a new video update, the host of DataDash tells his 515,000 YouTube subscribers that he sees the king crypto having another meltdown before it finds a strong support level in the $12,000 to $14,000 range.
“Do we have another sell-off coming? …Are we going to get one more final decline in prices and build a base on a probably more solid foundational channel around $12,000 to $14,000 for Bitcoin? Is it so crazy to think that it could happen?
Merten mentions the net unrealized profit and loss (NUPL) metric, an on-chain indicator that essentially shows whether Bitcoin holders are in a state of profit or loss. When the NUPL is above zero, there are more investors in profit than in losses. Below zero, more investors are nursing losses than reaping profits.
He says that Bitcoin’s NUPL hasn’t stayed in negative territory long enough to safely assume that the downtrend is over.
“During periods of time when we’re at bull market highs, the NUPL model is reading somewhere around 0.7 to 0.75, really overbought periods, and we start to charter into negative territory where price is lower than the average price most Bitcoin where moved at on-chain.
Now you can see when we enter into this blue range, which we did for a short period of time in June, we tend to hang in this range for a while during typical bear markets.”
The closely followed analyst says that BTC could be entering uncharted territories as it has never traded through a period of monetary tightening and interest rate hikes. He also says he doubts that the Federal Reserve will end up pivoting back to quantitative easing anytime soon as it has in the past.
“I want to emphasize one big thing. In all of the 10, generally 12 years, that Bitcoin has been liquidly traded on exchanges, we have never had a full 50% recession or almost depressionary correction or bear market in equities. We’ve had your typical 20% bear markets, where things start to sell 20% to 30%, where things sell off [and] the Fed comes to the rescue, saves the day.
[However] the Fed can no longer do what it’s done before, not unless it cools inflation… If the Federal Reserve were to print more for whatever reason and try to save the day, they are going to exacerbate the issue big time. The Fed cannot do that in a world of supply chain [issues], of talent shortage in the economy, low labor force participation and all of the concerns around commodity prices.”
Bitcoin is changing hands at $19,856 at time of writing, a fractional gain on the day.
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