Analyst Nicholas Merten stated in his recent video on YouTube that the global market cap can lose its value significantly due to the aggressive stance of the US Federal Reserve, which also leads to a liquidity crunch in the crypto space.
Merten’s recent revelations, shared in his latest YouTube video, have reverberated throughout the cryptocurrency sphere. He forecasts a significant potential drop of 43% in Bitcoin’s value from its current level, which would lead to a substantial reduction of $440 Billion in the total market capitalization of the cryptocurrency market.
Additionally, Merten envisions the market reaching a state of equilibrium around the $650 Billion market capitalization mark, with Bitcoin finding its footing within the range of $15,000 to $16,000.
In the best-case scenario, those who have already established their positions may hope for support to emerge in the vicinity of the $650 Billion market capitalization range, with Bitcoin potentially stabilizing in the $15,000 to $16,000 range. However, these forecasts indicate a potentially tumultuous period for cryptocurrency investors.
The Federal Reserve’s tightening of liquidity is causing waves of uncertainty within the cryptocurrency landscape.
The cryptocurrency market quickly reacted to Merten’s gloomy prediction. Bitcoin, the industry’s leading indicator, fell below the $26,000 level in Monday morning trading. Ethereum, the second-largest cryptocurrency, also declined and remained below the $1,600 mark. This pessimistic sentiment affected all other major digital assets, which experienced downward trends.
The recent decline in the cryptocurrency market follows the US Federal Reserve’s hawkish policy stance, which was revealed during its September meeting. Although the Fed temporarily paused interest rate hikes, it indicated a forthcoming increase by year-end and a commitment to maintaining higher rates for a longer duration than previously expected.
While the cryptocurrency market experienced a downturn, US stock futures showed resilience in early morning trading. This contrast highlights the difference in performance between digital currencies and traditional markets.
It’s worth noting that all three major US stock indexes concluded the previous week with losses. The cryptocurrency market is entering a period of increased volatility due to the uncertainty stemming from the Federal Reserve’s policy decisions.
Merten’s prediction serves as a reminder of how closely connected global financial markets are and how central bank policies can impact digital assets. Investors and enthusiasts are closely monitoring the situation as they prepare for potential market fluctuations.
Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.
Source: https://www.thecoinrepublic.com/2023/09/25/the-crypto-market-may-lose-440-billion-in-market-capitalization/