According to Markus Thielen, founder of 10x Research, the stock and crypto markets may be “at a critical tipping point” towards a major price correction.
“Last night, we sold everything,” Thielen said, citing continued inflation, a narrowing of interest rate cuts and rising bond yields as reasons for the bearish outlook. In an April 16 research note, the founders wrote:
“The main trigger is unexpected and persistent inflation. The bond market is currently at a critical turning point for risk assets, with less than three rate cuts expected and the 10-year Treasury yield above 4.50%. It may have been reached.”
The bearish research note comes as Bitcoin (BTC) price has fallen more than 9.3% this week, trading above the $63,400 level as of 9:15 a.m. UTC, according to CoinMarketCap data. It was published after.
According to a research note, the reason for Bitcoin's decline could be a decline in expectations for the next interest rate cut.
“Most of this 2023/2024 Bitcoin rally has been driven by expectations that interest rates will be lowered, and this narrative is now seriously challenged.”
Traders now expect interest rates to remain unchanged. According to CME Group's FedWatch tool, 99% of market participants expect the Federal Reserve to keep interest rates at their current range of 5.25% to 5.50%, up from 93.6% last month.
Thielen added that the company sold all of its tech stocks during Monday's trading.
“We only hold a few high-conviction crypto coins. Overall, we are a bearish risk asset.”
Related: ETH price nears three-year low vs. Bitcoin — can Ethereum ETF stem the tide?
Is Bitcoin price overheating?
Key technical indicators suggest that Bitcoin price may be “overbought.”
On the weekly chart, Bitcoin's Relative Strength Index (RSI) is currently at 67, suggesting the asset may be overheating. However, Bitcoin's RSI has cooled significantly from its 2024 high of 88 on March 24, according to TradingView.
RSI is a popular momentum indicator used to measure whether an asset is oversold or overbought based on the magnitude of recent price changes.
Investor focus has shifted to the upcoming Bitcoin halving, with long-term holders starting to sell their assets and move them off exchanges.
According to a Bitfinex research report shared with Cointelegraph, Bitcoin prices can recover as long as short-term holders absorb supply.
“There has been a shift in the composition of the Bitcoin investor base, with new entrants (short-term holders) absorbing the supply sold by long-term holders (LTH). If this momentum of STH absorbing the decline in LTH continues, there will be further price appreciation, as evidenced by the rising market value to realized value ratio of STH, albeit still below the level. This may indicate that there is room for
Related: “China is about to launch a bid” — Will Hong Kong Bitcoin ETF cause a halving rally?
