A widely followed crypto analyst is issuing a warning to investors, saying that Bitcoin’s (BTC) latest bounce is likely a bull trap ahead of a looming recession.
In a new strategy session, Nicholas Merten, the host of DataDash, tells his 511,000 YouTube subscribers that Bitcoin’s price increase in 2023 is similar to its past three relief rallies, which were followed by lower legs down.
“I want to go ahead and emphasize the percentage increase [as well], and not to mention a very similar time frame. We’ve had a 46% relief rally, 43% back between June to August, and since November towards January, we’ve had a 40% move in Bitcoin’s price. Now, this is getting to the typical percentage increase that we got during relief rallies and again, I just want to signal that caution.
Not to mention with how overbought we are at the moment, this is the highest we’ve gotten overbought on Bitcoin’s price since as far back as January 10th of 2021.”
At time of writing, Bitcoin is changing hands for $20,975, up 35% from its recent low of $15,698 set in November 2022.
Merten goes on to say that if global stocks see major outflows, it would start another crypto winter due to how correlated the asset classes are.
“When it comes to the overall performance of equities and [how] it will have an effect on crypto, do not doubt it if global equities are in a major outflow.
If we’re going into a recession and equity valuations start to go down towards lower levels, we continue having lower highs and lower lows which signify a downtrend, it would likely have the same effect on crypto. Until we see a break in that correlation, we got to think in that mindset.”
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