Crypto analyst Nicholas Merten is warning of a risk that Bitcoin (BTC) faces in the current macroeconomic environment.
Merten tells his 512,000 YouTube subscribers that over the long term, Bitcoin is going to experience a “really difficult time” as liquidity tightens.
According to the widely followed crypto analyst, Bitcoin’s price direction is heavily determined by monetary policy.
“We cannot sit here and say that Bitcoin is this hedge against money supply debasement and that it should go up when there’s new money in the system like it has been for the past decade, and then simply ignore when it’s [money supply] contracting.
Bitcoin works in the opposite effect here. It hedges that money debasement to the upside – when you print more money, Bitcoin’s value should obviously increase to some degree. And during periods of times of monetary contraction, it should struggle. It should generally be moving lower here to the downside…
Liquidity is the lifeline, it is the blood of all financial assets to continue appreciating.”
According to Merten, while Bitcoin has demonstrated some resiliency over the past couple of months, that could change if sentiment turns bearish.
“If investors who are buying up here [the $25,000 – $32,000 range], who are providing that current support while some people are selling, if they don’t see that there are enough other bulls on the market who are willing to market buy alongside them and eat up the asks on the order book and continue pushing prices higher…
If all those who have been market buying for the past couple of months realize that there’s really not enough momentum to clear through this prior support range that’s now acting as the resistance between $28,000 and $32,000, people are going to start cashing out.”
Bitcoin is trading at $27,715 at time of writing.
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