A widely followed crypto analyst is warning that big tech stocks and digital assets could perform poorly for years to come.
In a new strategy session, DataDash host Nicholas Merten tells his 512,000 YouTube subscribers that tech giants and crypto assets, including Bitcoin (BTC), could put up lackluster gains over the next several years.
“One of the worst performing assets of the next couple years could be cryptocurrencies and the FAANG stocks, or the big technology companies. I’m talking about Facebook, Amazon, Netflix, Google, Microsoft, Apple, the huge technology companies that have made monstrous gains and outpaced the broader stock market…
I’m talking about not only Bitcoin but the broader altcoin space as well as a whole that used to make crazy insane multiples.”
Merten’s thesis is based on contracting market liquidity due to the Federal Reserve’s hawkish policies, among other factors.
“We’re in an environment of contracting liquidity. We’re in an environment where essentially crypto is struggling, more importantly, to find its value proposition after making huge gains. And on top of that as well, crypto in order to accelerate from its current market cap of a trillion dollars, is going to have a much more difficult time getting to $10 trillion than it did when it was at, say, $100 billion market cap going towards a trillion dollars.
It’s important to understand you need much more liquidity, you need much more fundamental value creation in order to spur these bull markets. And as we emphasized here, we’ve got liquidity working against us here. The Fed alone is pulling back the balance sheet by about $100 billion each month.
Global liquidity looks like it’s ready for new lows and the federal funds rate when talking about the United States and other central banks as a whole are starting to move to their highest levels since back in 2007, and similar levels we saw back in the early 1990s, or at the beginning of the acceleration in the 1970s, in order to tame inflation.”
Bitcoin is trading for $25,841 at time of writing, a 1.05% increase during the last 24 hours.
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