Expert Warns: Bitcoin Forming a Dangerous Bull Trap as Recession Looms – Is it Time to Sell Your BTC?
Bitcoin price could drop further in double digits percentage soon despite rallying about 40 percent in the past two weeks. These are sentiments made by popular crypto economist Nicholas Merten, the host of the DataDash YouTube channel with over 500k subscribers.
Merten noted that crypto and equity prices have been rallying in the past few months despite the lack of a positive economic outlook. As such, the analyst attributed the crypto rally to macroeconomic aspects including the global central bank’s liquidity which is not shrinking.
With minimal inflows of cash into the Bitcoin market caused by recession fears, Merten cautioned crypto investors that the relief rally is exhausted and a reversal is imminent. However, the analyst highlighted that Bitcoin price could rally further as it did in previous bear markets.
With Bitcoin price at the highest daily RSI overbought level in two years, Merten noted that bulls are exhausted and the bears are about to take control once again. Moreover, the analyst attributed the equities buybacks that were rampant in 2022 to a looming recession that will eventually crush Bitcoin prices.
“When it comes to the overall performance of equities and [how] it will have an effect on crypto, do not doubt it if global equities are in a major outflow. If we’re going into a recession and equity valuations start to go down towards lower levels, we continue having lower highs and lower lows which signify a downtrend, it would likely have the same effect on crypto. Until we see a break in that correlation, we got to think in that mindset,” Merten said.
Notably, Merten is warning crypto traders who think the recent rally is a sign of a looming major breakout. Moreover, on-chain analytics firms have identified a higher appetite for risky assets in the recent past.