Crypto analyst Nicholas Merten made an important warning about the future of the altcoin market in his latest statements. According to Merten, the altcoin market cap could drop significantly in the near future.
Merten examined the current state of the altcoin market in his recent YouTube video, noting the lack of any new catalysts to attract more liquidity. For the analyst, new events and news are constantly needed to keep the altcoin market alive. However, according to Merten, the altcoin market currently lacks new catalysts, which provides a favorable environment for depreciation.
“There is not much progress at the moment. It doesn’t even come close to what we need for a new bull market. I was there during the last bear market in 2018 and 2019 and I can tell you DeFi (decentralized finance), NFTs (immutable tokens) were resurgent. There were a lot of fundamental things that really justified the coming of new liquidity.”
Merten took a closer look at the recent price action of the three tier 2 scaling solution projects – Optimism (OP), Arbitrum (ARB) and Polygon (MATIC) – to support the bearish thesis.
“For example, we can see Optimism, one of the major layer-2 scaling solutions, drop from $1.90 to $1.53. Arbitrum slumped to $1.20 after a high of around $1.80 the previous day and dropped to as low as $1… Take a look at MATIC, it’s down almost 50% since its peak in February and that means we’re not in a new bull market, it’s mainly because market makers are weak It was one of the signs that it was a game where they were upping the liquidity and order book.”
Merten also thinks Pepe is a sign that the altcoin market is weakening.
“And Pepe, if that’s not a sign for you guys… I don’t know what is… If the only thing that’s getting people excited at this time is a meme coin that’s been crashing in the last few days… it’s a complete disaster for the industry.”
Finally, Merten also examined the TOTAL2 index table, which calculates the market value of all cryptocurrencies except Bitcoin (BTC). According to Merten, the TOTAL2 chart creates an expanding channel that traders use to try and predict the market trend in technical analysis.
The analyst says it’s probably on its way to hitting the lows of the range after hitting the TOTAL2’s diagonal resistance.
“Crypto markets are not ready to rise. TOTAL2 … already down 15% in less than a month. And that looks like an expanding channel to me. (…) We are heading towards previous lows with a market cap of around $430 billion for altcoins. We are currently at $560 billion.”
You can follow the current price action here.