Crypto analyst Nicholas Merten warned about the risks Bitcoin (BTC) faces in the current macroeconomic environment. The analyst emphasized that investors could quickly exit the market by jumping off the trend if they do not see the expected support.
Liquidity Contraction: The Biggest Obstacle for Bitcoin
Experienced crypto analyst Nicholas Merten stated on his YouTube channel that Bitcoin will have a really tough time in the long run as liquidity decreases. According to the analyst, the potential direction of the price of the largest cryptocurrency is largely determined by monetary policy decisions:
We can’t sit here and say that Bitcoin has a protective shield against liquidity contraction and that it should rise when new money enters the system, as it is not possible to ignore the decrease in money supply.
Bitcoin has the opposite effect here. It hedges the depreciation of money and when you print more money, the value of Bitcoin clearly increases to a certain extent. In periods of monetary contraction, Bitcoin should struggle as expected. It generally needs to move downward.
Liquidity is a life raft for markets, and for the continued decrease in liquidity, the blood of all financial assets needs to flow.
Investor Sentiment Can Change Rapidly if Unsatisfied
According to Merten, although BTC has shown some strength in price movements in the past few months, if this sentiment shifts to the negative zone, the situation can change rapidly and dramatically. The analyst stated the following in his warning:
If investors who bought between $25,000 and $32,000 and provided the current support do not see that there are enough other buyers willing to continue buying and consume the demand in the order book to raise prices, things will change quickly.
If everyone who has been buying in the market in the past few months realizes that there is not enough momentum to surpass this previous support range, which is currently acting as resistance between $28,000 and $32,000, people will start to withdraw their money.
According to the latest data, Bitcoin is trading at $27,758 with a 0.33% increase in the last 24 hours. CoinMarketCap data shows that the largest cryptocurrency has increased by 2.64% in the last 7 days and 7.83% in the last 30 days.
