A widely followed crypto analyst is predicting that the altcoin market cap will decline dramatically as memecoin Pepe (PEPE) plummets.
In a new DataDash update, crypto analyst Nicholas Merten tells his 511,000 YouTube subscribers that the altcoin market currently lacks any new catalyst that would attract more liquidity, setting the stage for a fall from its current top.
“There is not much development going on right now. Nowhere near what we need for another bull market. I was there during the last bear market in 2018 and 2019, and I can tell you guys there was DeFi (decentralized finance), NFTs (non-fungible tokens) were making a resurgence. There was a whole lot of fundamental things that actually justified new liquidity coming in.”
Merten looks at the recent price action of three layer-2 scaling solution projects – Optimism (OP), Arbitrum (ARB) and Polygon (MATIC) – to support his prediction that the altcoin market is going to keep bleeding liquidity.
“We can see that Optimism for example, one of the big layer-2 scaling solutions, down from $1.90 down to $1.53. Arbitrum back the other day at around $1.20 after a previous high of around $1.80, down towards $1…
Take a look at MATIC here, down nearly 50% since its high back in February, and this was one of the giveaway signs here that we weren’t in a new bull market, that essentially this is a game where market makers on thin liquidity drive up the order book.”
Merten also says that Pepe is a telltale sign that the altcoin market is weakening.
“And if Pepe wasn’t the sign here for you guys… I don’t know what is…
If the only thing that is getting people excited in this period of time is a memecoin, which has been dumping here over the past couple of days… this is just abysmal for the industry…
Speculation does not do well in contractionary environments.”
Lastly, Merten looks at the TOTAL2 Index chart, which calculates the market capitalization of all crypto excluding Bitcoin (BTC). According to Merten the TOTAL2 chart is forming an expanding channel, which traders use in technical analysis to try and predict a market trend.
The analyst says that TOTAL2 is likely en route to hitting the lows of the range after hitting its diagonal resistance.
“Crypto markets are not ready to move higher. TOTAL2 … in less than a month has already dropped 15%. And this to me just looks like an expanding channel. And if the highs have been expanding, that means that the lows are expanding. And where does it lead us right back to? Right back towards the previous lows at around a $430 billion market cap for altcoins. Right now where we stand, we’re at $560 billion.”
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Source: https://dailyhodl.com/2023/05/16/altcoin-cleansing-underway-as-pepe-memecoin-signals-market-cycle-top-according-to-analyst-nicholas-merten/