A popular analyst closely followed by cryptocurrency traders is addressing an important detail that many overlook. The widely followed crypto analyst thinks that as memecoin Pepe (PEPE) falls, the altcoin market capitalization will decrease significantly. Here are the details.
Pepe Coin and Altcoins
In his latest market update, Nicholas Merten said that the altcoin market currently lacks a new catalyst to attract more liquidity, setting the stage for a decline from its current peak. With dwindling liquidity already eroding altcoins, Merten believes the worst is yet to come.
“There’s not much going on right now. We are nowhere near what we need for another bull market. I was there during the last bear market in 2018 and 2019, and I can tell you that DeFi (decentralized finance), NFTs are resurgent. There were actually a lot of fundamental things that justified the arrival of new liquidity.”
Merten looks at the recent price action of three layer2 scaling solution projects – Optimism (OP), Arbitrum (ARB) and Polygon (MATIC) – to support his prediction that the altcoin market will continue to see liquidity flow.
“For example, we can see that Optimism, one of the major layer2 scaling solutions, has fallen from $1.90 to $1.53. Arbitrum fell to around $1.20 after a high of around $1.80 the previous day.”
The Future of Altcoins
Polygon (MATIC) has fallen almost 50% since its February high and this seems to signal that we are not in a new bull market. According to Merten, the Pepe Coin price chart seems to be a sign that the altcoin market is weakening.
“And if Pepe isn’t a sign for you… I don’t know what is. If the only thing that has gotten people excited during this time is a memecoin that’s been dumping here for the last few days… that sucks for the industry… Speculation doesn’t work well in a contractionary environment.”
Finally, Merten looks at the TOTAL2 Index chart, which calculates the market capitalization of all cryptos except Bitcoin (BTC). According to Merten, the TOTAL2 chart forms a widening channel that traders use in technical analysis to try and predict a market trend.
The analyst says that TOTAL2 is probably on track to reach the lows of the range after reaching its diagonal resistance.
