Nicholas Merten, the host of the popular YouTube channel DataDash, recently cautioned his audience of over half a million subscribers that both cryptocurrencies and leading technology stocks might experience subpar returns in the coming years. Merten expressed concern not just for Bitcoin but also for a wide range of alternative cryptocurrencies and the FAANG stocks—Facebook, Amazon, Netflix, Google, Microsoft, and Apple.
Merten attributes this pessimistic outlook to several factors, primarily the tightening of market liquidity due to the Federal Reserve’s increasingly stringent policies. He elaborated that the crypto market, which currently has a valuation of around one trillion dollars, will find it considerably more challenging to reach a ten trillion dollar market cap compared to its earlier growth from a hundred billion dollars.
According to Merten, the current economic landscape is characterized by contracting liquidity. He emphasized that for cryptocurrencies to experience another bull market, there needs to be a significant increase in both liquidity and fundamental value. However, the Federal Reserve’s current approach of reducing its balance sheet by approximately $100 billion each month is working against this.
Merten also pointed out that global liquidity appears to be on the decline, and interest rates set by central banks, including the United States Federal Reserve, are reaching their highest levels since 2007. These rates are comparable to those seen in the early 1990s and during the inflation-taming efforts of the 1970s.
Around two weeks prior, Merten had also shared his reservations about the future of Bitcoin (BTC) and Ethereum (ETH), the two leading cryptocurrencies by market capitalization. He noted a lack of bullish momentum for these assets and warned that further market downturns could be imminent. Merten specifically highlighted concerns about Ethereum’s ascending support line and the imbalance between sellers and buyers. He warned that if bullish support doesn’t materialize soon, Ethereum could potentially drop below the $1,000 mark.
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