According to Markus Thielen, head of research at 10x Research, risky assets like crypto and stocks could see a “significant price correction” in the coming weeks.
In an April 16 investor note, Thielen shared his insights, writing that the cryptocurrency market is heading toward a “crucial inflection point” that could lead to a significant price correction. The analyst revealed that his firm sold all technology stocks in anticipation of this bearish event.
“We sold everything last night,” Thielen wrote.
The founder cited declining interest rate cuts, rising bond yields and persistent inflation as deterrents to his pessimistic outlook.
The analysis follows Bitcoin's 11% decline over the past week. The flagship cryptocurrency is down 6.7% in the last 24 hours. At the time of publication, the transaction price was $61,988.93. Thielen attributed Bitcoin's decline to fading expectations of a cut in US interest rates.
“Most of this 2023/2024 Bitcoin rally is being driven by expectations that interest rates will be cut, and that narrative is now being seriously challenged,” he added.
According to CME's FedWatch tool, a platform that measures market sentiment, 97.5% of market participants expect interest rates to remain unchanged.
CME FedWatch Tool Probability of Fed Rate Change | Source: CME Group
The expectations are consistent with recent comments from Mary Daly, president of the San Francisco Federal Reserve Bank. According to Daly, there is “no urgency” for the US to cut interest rates.
Additionally, Thielen revealed that his company still has some “high-conviction crypto coins.” However, he clarified that the company's overall sentiment remains pessimistic.
Thielen's warning follows his previous bearish scenario for Bitcoin. In an April 15 investor note, he speculated that cryptocurrency miners could dump $5 billion worth of Bitcoin in the months following the halving. Citing historical data, the analyst concluded that the crypto market could experience an extended period of “summer doldrums.”
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