JAKARTA - The US Federal Reserve is the central bank of the United States which has great power in determining the country's monetary and economic policies. However, the actions taken by the Fed also have a significant impact on the crypto market and digital currencies, such as Bitcoin.
Recently, a popular crypto analyst, Nicholas Merten, expressed his views on how the Fed's policies could affect the price of Bitcoin and the overall crypto market. Renowned crypto analyst Nicholas Merten warned that the actions of the US Federal Reserve could trigger a decline in the price of Bitcoin (BTC) and the overall crypto market.
In a recent video on his YouTube channel, DataDash, Merten expressed his view that the Fed's continuing interest rate hikes as a way to fight inflation could wreak havoc in the crypto industry.
Merten also stated that the latest testimony from Fed Chair Jerome Powell is likely to push Bitcoin below the $20.000 level in the near term as the Fed throws a liquidity trap.
According to Merten, the Fed has long used the flip-flop narrative mechanism to absorb liquidity from the real economy into financial markets. The Fed does this by providing reasons to add liquidity to the system and continue to hit its two percent inflation target.
He explained that the Fed has been doing this for most of the last decade, and the only difference this time is that they are leveraging market euphoria and optimism as a way to trap liquidity and absorb liquidity from the real economy.
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Merten also noted that cryptocurrencies are still very much associated with traditional markets. He emphasized that if the price of BTC goes down, traders will be happy to buy Bitcoin in the price range between 13.000 US dollars (about IDR 200 million) and 14.000 US dollars (IDR 216 million).
Although Merten said that the price of Bitcoin may not drop to 7.000 US dollars (IDR 108 million) or 10.000 US dollars (IDR 154 million), he said that a price drop of up to 14.000 US dollars or 13.000 US dollars is possible.
Nonetheless, Merten still urges investors to pay attention to the Fed's actions and the latest testimony from Powell. According to him, the Fed's steps could trigger turmoil in the crypto market, and investors should be aware of this.
"The past month and a half has been pretty complete proof that crypto isn't yet separated from everything, and maybe Bitcoin isn't going to drop to $7.000 or $10.000, the kind of big mindless big drop that's generally in line with traditional crypto bear markets, maybe it will still drop to 14.000 US dollars or 13.000 US dollars, I will be happy to wait for it."
Merten stressed that the crypto market is still very volatile and full of uncertainty. However, he reminded investors that cryptocurrencies are assets that can provide large returns in the long term, provided they understand the risks involved and do proper research before investing.
In addition, he also warned that although cryptocurrency can provide long-term benefits, crypto is not free from risks. Therefore understanding the associated risks is a wise action before investing. At the time of writing, Bitcoin is trading at the level of IDR 335,811,017 according to Coingecko data. The price of BTC has decreased by 2 percent in the last 24 hours.
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