Crypto analyst Nicholas Merten says the crypto bear market is not over and macroeconomic forces will likely drive prices lower.
In a new video update, Merten tells his 513,000 YouTube subscribers that he expects the US Federal Reserve will not let up on its hawkish stance in the short term, driving risk assets like crypto even lower.
“I think we need a bit more shock and awe before we really see the end of this correction period.”
Merten says the green candles are not forming a bullish market reversal and Bitcoin’s (BTC) 200-day moving average is not rising above the 200-week moving average, which usually occurs when investors buy the dip in price.
“What drives bull markets are those initial 10% to 20% candles to the upside that signal it’s time to go long, the bear market’s over. We are not seeing that yet. And we are about to see something that for the first time in history has happened, which is the 200-day moving average is crossing the 200-week moving average. It is the first time we have seen this here.
Every time the 200-day moving average would slowly cup up right above and start moving higher above that weekly-moving average because it used to be a buy-the-dip opportunity. Nowadays, Bitcoin has been trending below the 200-week moving average since back in June. That is a screaming sign of fear. We’ve never seen this throughout Bitcoin’s history, having it remain below that moving average for so long.”
Merten says a hawkish US Federal Reserve is driving the bearish crypto market as investors tend to pull out of risk assets like crypto when interest rates are hiked.
“I think that is indicative that the market is starting to realize, especially in the most risk-on assets, that the Federal Reserve is much more likely to continue tightening, not just on interest rates, but also on its balance sheet, if it wants to tame inflation. Again, it is up to the Fed. And the Fed has pivoted and changed from time to time throughout its history. It has said one thing and done another many times throughout history.
But something’s different here. Time and time again, like during bull markets where the Fed would always pivot, during the past year the Fed has made it very clear that it will continue to tighten and tighten and tighten, even against the experts and the market experts out there who are calling for a pivot.”
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