Nicholas Merten, a veteran cryptocurrency analyst known for his accurate predictions, warned cryptocurrency investors that Bitcoin (BTC) could collapse if the U.S. economy slips into recession. Merten emphasized that if the Fed’s hawkish approach leads to a prolonged economic recession, Bitcoin could fall by more than 46% from its current price. Analysts say falling prices for commodities such as oil, natural gas and uranium will signal a near-term recession is coming:

Short-term recessions will cause some pain. Stocks are likely to return to their lowest levels, close to their October 2022 lows, a 33% correction. Bitcoin could return to the lower range we saw previously around $15,000 to $17,000, which is actually a very good scenario. Many assets will form a double bottom.

“Bitcoin and altcoins need increased liquidity from the Fed to rise”

Furthermore, Merten does not expect a strong and sustained bull run in the largest cryptocurrencies and altcoins until the Federal Reserve starts adding liquidity to the market to support the economy. Discussing the issue, analysts said:

Bitcoin is not showing a clear trend. For example, from March to October we were trading sideways, which didn't look like a bull market to me at all. We broke out of the ascending channel but were unable to break through clear resistance between $28,000 and $32,000. I think it’s time to take a conservative approach when predicting the direction of the cryptocurrency market. (Public account: Pepe Stud)

I think we need to be patient and wait for real signs of optimism, especially signs that liquidity will work in our favor because the cryptocurrency market is very dependent on liquidity. Liquidity is the lifeblood of risky assets like Bitcoin.

The bottom line is that Bitcoin is an asset that performs best when the supply of money in circulation increases and risk-taking mentality essentially increases, which is currently not happening.