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Popular crypto analyst Nicholas Merten of the YouTube channel DataDash recently shared his thoughts on the current state of Bitcoin and the crypto market. He emphasized the importance of analyzing momentum indicators to understand the market’s short-term direction.
Nicholas pointed out that Bitcoin has not made new highs for nearly a month, and its price is at its lowest since March 17. He expressed concern about the stagnation in the trend, stating that the momentum indicators, including the Dash Report and Lux Algo, signal that bears are taking control in the short term. Despite this, the weekly timeframe still shows bulls in control since January’s breakout.
The Next Bull Market
The stagnation has led to questions about whether the market is ready for another bull run. Nicholas mentioned that numerous narratives have been applied to explain the potential for a new bull market, such as central bank balance sheet expansion or bank runs. However, he argued that none of these narratives have held true, as the U.S. Central Bank balance sheet has contracted, and stablecoin liquidity has remained flat.
Liquidity is Key for New Bull Markets
According to Nicholas, an increase in stablecoin liquidity is essential for on-ramps of new liquidity from hedge funds, family funds, and high-net-worth individuals. The current state of the market shows a contraction in stablecoin liquidity and global liquidity. This contraction, combined with the lack of new entries in the crypto space, raises doubts about the potential for a new bull market.
Current Challenges in the Crypto Space
Nicholas highlighted the challenges faced by the crypto industry, such as the setbacks caused by FTX, Celsius, and other exchanges. Additionally, the loss of institutional backbones like Genesis, Silver Gate, and Signature Bank has hindered on-ramps and off-ramps for large-scale crypto companies. This situation has contributed to the stagnation of dollar liquidity in the crypto space.
Despite these challenges, Bitcoin remains the strongest player in the market. However, even Bitcoin is beginning to show weakness. As Nicholas concluded, understanding the current state of the crypto space is essential for making informed decisions on the future of Bitcoin and the broader market.