According to some analysts, the circumstances of the crypto market are not very favorable for investments. In these conditions which tend to drag on, it is not excluded that the price of cryptos will plummet throughout this year.
Towards a remarkable fall in bitcoin and altcoins in 2023
A few days ago, the famous analyst Bluntz anticipated a significant drop in the price of bitcoin. The valuation of the flagship crypto would, he indicated, momentarily recover from its recent fall, before collapsing afterwards.
These gloomy projections seem not to be limited to bitcoin. They also concern alternative cryptocurrencies to bitcoin (altcoins). The latter should experience the same fate as the queen of cryptos. This is according to Nicholas Merton, crypto analyst at Data Dash.
Recently, the latter delivered his interpretation of the situation of the crypto industry. He believes that the current conditions in the crypto industry are not conducive to investment. A situation that will strongly affect the price of cryptos.
In this context, the analyst expects a sinking of the valuation of these assets, this, throughout this year. Thus, the sustained decline in bitcoin and altcoin prices would destroy the hope of a potential end of the bear market in 2023.
The low liquidity of the stablecoin market as a cause?
This negative outlook of Nicholas Merton around the cryptocurrency market is based on whether it is liquid or not. More particularly of the stablecoins market which is, according to him, decisive in the valuation of cryptos.
Merton thinks that when stablecoins are liquid, in particular by facilitating the conversion of cryptos into cash, this is reflected in the price. Because the liquidity of the stablecoin market would, according to him, have a leverage effect on the price of cryptos. The reverse is also true.
“We see that if we look at history, even beyond that, in previous bull markets…we see that there is an increase in Tether as it becomes an increasingly important player and tool in the crypto space since 2015,” explained Merton.
However, this liquidity, which implies the ease of converting an asset into cash, did not increase in 2022. It even particularly stagnated, or even fell over the period. It is this situation that would impact the price of cryptos. Unless solutions are implemented to turn the tide.
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