Nicholas Merten, a veteran cryptocurrency analyst and founder of DataDash, has called for Bitcoin to sink to $14,000 after falling below $19,000 over the weekend.
The analyst cited both technical and macroeconomic factors, including one indicator he calls “absolutely doomed” for Bitcoin’s price.
Deeper Waters for Bitcoin?
In a video published On Monday, Merten noted that Bitcoin’s 200-week moving average (WMA) has become a level of price resistance, rather than support. The major cryptocurrency has almost always remained above the average throughout its existence, with rare dips below it marking cyclical bottoms.
However, Bitcoin and crypto markets fell below this level during the crypto market crash in June, which saw Bitcoin fall to $17,600. Since then, it has been in the low twenties, well below the 200 WMA of around $23,000.
Given its inability to return above this level, the analyst stated that Bitcoin is now in “uncharted territory”.
“We’ve never seen these circumstances play out for Bitcoin,” he said. “Usually the price breaks below the weekly moving averages, the rallies, because of people buying the capitulation.”
The founder concluded that Bitcoin’s recent price action likely signals “the end of a decades-long secular bull market” that Bitcoin has experienced throughout its life, along with stocks. As such, he suspects that he can no longer be a active leader compared to other commodities and stocks.
According to the analyst, the cryptocurrency’s next bottom could be near $14,000. This would mark an 80% correction from its all-time high, similar to previous bear markets.
“That’s the least we can ask for at this point,” Merten said, adding that investors should consider the possibility of an even steeper decline to $10,000.
The merger and the macro
Commenting on Ethereum’s recent merger, Merten labeled the update “a clear one”buy the hype, sell the news‘event”. He expects the second-largest cryptocurrency to retest the $800-$1,000 level, and possibly lower.
Contributing to potential downside is the Federal Reserve’s upcoming interest rate decision, in which the market expects another 75 basis point hike. Hawkish monetary policy has coincided with significant declines in stocks and crypto throughout 2022.
This policy has created a higher cost of housing in the United States, including sudden increases in fixed-rate mortgages. It has also caused 2-year Treasury bond yields to reverse those of their 10- and 30-year equivalents.
Despite the potential dangers to the economy this could pose, Merten does not expect the central bank to stop raising rates until it can confidently suppress inflation.
“This could very well be depressed recession levels,” he said.
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