Analyst Nicholas Merten, who is followed by many crypto investors, thinks that the latest rally in the market may be a bull trap. He says he will take a short position in this coin despite gaining 100% since November.
Nicholas Merten talks about short opportunities as the crypto market booms
In a new video from DataDash, Merten states that Bitcoin is facing resistance in the $29,000 to $32,000 range. This may cause Bitcoin to depreciate in the near future. In other words, in Merten’s view, Bitcoin’s recent rally is not a real uptrend, but simply a relief rally as a result of market overzeal.
In his recent DataDash engagement, Merten explained the reasons for the drop expectation: “You want to wait until the installations come to you. There is a very good chance that this will act as a resistance, especially after a 100% move in Bitcoin’s price. It’s the kind of relaxation rally I want to short.”
Which direction does historical data point for BTC?
According to Merten, Bitcoin can be expected to follow 2019 price movements, as some have suggested. About four years ago, Bitcoin saw a 300% rally in just a few months. However, current market conditions are creating stronger resistances for Bitcoin:
We probably won’t be repeating the same hyperbolic, rapid recovery we had in the last cycle, at least roughly speaking, we won’t go to that point, 300% action. From the bottom up, this was a huge increase in Bitcoin’s price, a much larger move that took place over a longer period of time.
Merten later said, based on historical data, that the last rally was probably a bear trap:
We’ve seen about 100% movement so far. So I really don’t like people making this comparison. What I think is actually a lot fairer when it comes to percentage terms, and more relevant to what we’re experiencing right now, is the same relaxation rally trap that’s constantly played out in this bear market.
Bitcoin could follow this pattern
The crypto analyst says that Bitcoin most likely followed a similar pattern in which it started to rise to the ATH level in June 2021 and then collapsed:
Note the pattern we may be repeating here, a 139% move from the mid-cycle correction lows here in June 2021. In about 20 weeks, we’ve seen Bitcoin rally 139%, but fall back at a time when everyone was convinced it was the super-cycle, the dollar crashing, and that Bitcoin was the super asset to head towards $100,000. What happened then? We entered a brutal bear market, a downtrend for several months.
cryptocoin.comAs you follow, Bitcoin was trading in the $ 30,300 region at the time of writing. Contrary to Merten’s expectations, he has not yet returned the gains of the last rally, where he kept his weekly gains around 8%.
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