The future trajectory of the Bitcoin price may not be as smooth as many have predicted, according to crypto analyst Nicholas Merten. In a recent episode of his YouTube channel DataDash, Merten highlighted several macro factors that could potentially disrupt the crypto market and cause significant volatility.
Merten pointed out the direct correlation between equities and the crypto market, stating that the direction of equities and broader assets would have a direct impact on Bitcoin. He noted that coins began to pick up at the beginning of the year, coinciding with a high in the equity market. However, Merten expressed concerns about the current quietness in the equity market, suggesting that if major tech stocks such as Apple, Microsoft, and Fang fail to gain momentum, it could lead to a “really big problem” for the crypto market.
Another macro factor that Merten emphasized was inflation data. He criticized the Federal Reserve’s handling of inflation, stating that they were not doing enough to curb it and bring it down to the target of 2%. Merten suggested that the Fed could have taken a more stringent approach by raising interest rates by 75 basis points or even 100.
Inflation rates have a significant impact on the crypto market, as higher rates can limit investors’ ability to spend in the crypto market. Merten pointed out that the Fed’s inaction is evident as prices of goods and services, including energy, are re-inflating. He drew parallels to the 1970s, a period of high inflation, and warned that if there is a similar trend or resemblance to that time, it could pose a “huge problem.”
Merten addressed the current situation with BRICS (Brazil, Russia, India, China, South Africa), suggesting that the world is de-globalizing and nations are becoming less trusting of each other. This shift in global dynamics could potentially impact trade deals and foreign relations, leading to inflationary pressures. Merten argued that the imbalance between supply and demand is one of the major causes of re-inflation.
He attributed this imbalance to the excess printing of money and the stimulus checks provided during the COVID-19 pandemic. According to Merten, there is too much purchasing power in the system without sufficient supply to meet the demands. This excess money in circulation has led to people getting rich, but it also amplifies the risk of inflation.
Based on these macro factors, Merten concluded that the future of the Bitcoin price may face turbulence. The correlation between equities and cryptocurrencies, coupled with inadequate measures to control inflation and the de-globalization trend, could potentially create a volatile environment for the crypto market.
Investors and traders should remain cautious and closely monitor the developments in equities, inflation rates, and global relations. The interplay of these factors can significantly impact the value and stability of cryptocurrencies, including Bitcoin.
While the original article provided insights into the potential risks facing the Bitcoin price, this critical analysis sheds further light on the interconnections between equities, inflation data, and global dynamics. By scrutinizing these factors, investors can make informed decisions and navigate the turbulent times ahead.
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