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In a stark warning from 10x Research, founder Markus Thielen predicts a significant downturn for both stock and cryptocurrency markets, driven by persistent inflation fears and diminishing hopes for rate cuts. This alert comes as Bitcoin tumbled over 9% in recent trading.
Markus Thielen Signals Market Downturn Amid Inflation Woes and Bond Yield Surge
According to Markus Thielen (via Cointelegraph), founder of 10x Research, the stock and cryptocurrency markets may be "ahead of a crucial tipping point" that would result in a significant price drop.
“We sold everything last night,” wrote Thielen, citing persistent inflation, decreasing rate cuts, and a rising bond yield behind his bearish outlook.
“The primary trigger is the unexpected and persistent inflation. With the bond market now projecting less than three cuts and 10-year Treasury Yields surpassing 4.50%, we may have arrived at a crucial tipping point for risk assets," the founder wrote In an April 16 research note.
The gloomy research note comes as Bitcoin's price declined over 9.3% this week, trading above $63,400 as of 9:15 a.m. UTC, according to CoinMarketCap.
According to the research paper, Bitcoin's loss could be attributed to diminishing expectations of an upcoming interest rate cut.
“Most of this 2023/2024 bitcoin rally is driven by expectations that interest rates would be cut, and this narrative is being seriously challenged now.”
According to the CME Group's FedWatch Tool, 99% of market players expect the Federal Reserve to keep interest rates at their current level of 5.25%-5.50%, up from 93.6% a month earlier.
Thielen noted that the corporation sold all of its IT stocks at the start of Monday's trading session:
“We only hold a few high-conviction crypto coins. Overall, we are bearish risk assets.”
Bitcoin Faces Overbought Concerns, RSI Dips as Market Prepares for Halving Event
A crucial technical signal shows that the Bitcoin price could be "overbought."
The weekly chart shows Bitcoin's relative strength index (RSI) around 67, indicating that the asset may be overvalued. However, TradingView says Bitcoin's RSI dropped considerably from its 2024 high of 88 on March 24.
The RSI is a common momentum indicator that determines whether an asset is oversold or overbought based on the size of recent price moves.
Investors' attention has switched to the imminent Bitcoin halving, leading long-term holders to sell and shift assets off exchanges. According to a Bitfinex research report shared with Cointelegraph, Bitcoin's price may rebound as long as short-term holders absorb the supply.
“There has been a shift in the makeup of the Bitcoin investor base, with new entrants (Short-Term Holders) absorbing the supply sold by Long-Term Holders (LTHs). The rising Market Value evidences this to Realized Value ratio for STHs, albeit it is still below peak levels seen in previous cycles. If this dynamic of STHs absorbing LTH sell downs persists, it could indicate room for further price growth," it read.
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