In a recent video, Nicholas Merton, the crypto YouTuber from DataDash, addressed the stagnation that bitcoin has been experiencing since March 2023.
Merton compared bitcoin’s performance to its peers in the crypto space, highlighting the lack of momentum and follow-through on narratives that have previously propelled bitcoin forward.
Merton pointed out that theories of a bitcoin (BTC) bank run and de-dollarization, which have been significant drivers of bitcoin’s growth, have not been realized. This has raised concerns about bitcoin’s future performance and its position as a leading asset class.
The YouTuber advised investors against the notion that crypto is the only asset class worth investing in, emphasizing the importance of diversification. The Nasdaq, dominated by tech giants such as Apple and Microsoft, has been outpacing bitcoin.
The index has reached its highest point since April 2022, propelled by a trend towards artificial intelligence (AI). When comparing the performance of bitcoin versus the Nasdaq, bitcoin had a better return at the end of 2022.
However, this advantage has since diminished, with the ratio declining by over 20%.
While the bear market is still ongoing, the spread between bitcoin and traditional tech stocks is narrowing. The current bitcoin to Nasdaq ratio is at a critical level for the cryptocurrency. Breaking below this level could lead to a short-term distribution period and potentially lower prices.
Merton also raised the question of whether we will see a third low in the current bear market, as bitcoin continues to underperform compared to broader asset classes.
The lack of market leaders in both stocks and crypto has shifted focus towards potential long-term plays in emerging technologies such as augmented reality (AR), virtual reality (VR), and AI.
Projects like OpenAR are leading the way in the metaverse space, and the upcoming release of Apple’s augmented reality glasses — with the unveiling expected to happen at today’s WWDC — has sparked momentum in the crypto space.
Metaverse projects have seen significant growth, but Merton cautioned investors about the AI narrative, which may be overbought and may not continue to support asset markets.
While projects related to AI and virtual reality are expected to outpace those in decentralized finance (defi) and the broader non-fungible token (NFT) space, Merton warned that the demand for generative AI may be overestimated.
The cryptocurrency market continues to outperform the stock market, with bitcoin on the verge of surpassing the Nasdaq composite index in year-to-date returns. AR/VR is emerging as a new trend in investment, with some analysts suggesting it could be as big as the AI trend in the long term.
Merton advised investors to ensure their portfolios are diversified and to consider holding cash on the sidelines for potential dip opportunities.
