Key Points
- Markus Thielen, head of research at 10x Research, predicts a possible significant price correction for risk assets like crypto and stocks.
- Thielen’s firm has sold all tech stocks in anticipation of a bearish market event.
Markus Thielen, 10x Research’s lead researcher, has warned of a possible major price correction in the crypto and stock markets. He shared this outlook in an investor note dated April 16.
Thielen stated that the cryptocurrency market is approaching a critical juncture, which could trigger a significant drop in prices. His firm has preemptively sold all its tech stocks in response to this prediction.
Factors Influencing the Bearish Outlook
Thielen’s bearish outlook is influenced by several factors. These include reducing rate cuts, increasing bond yields, and ongoing inflation. This perspective comes in the wake of a recent 11% decrease in Bitcoin’s value over the past week.
The leading cryptocurrency has experienced a 6.7% drop in just the last 24 hours, and was trading at $61,988.93 at the time of the report. Thielen attributes Bitcoin’s decline to diminishing expectations of a cut in U.S. interest rates.
He stated that the expected Bitcoin rally in 2023/2024 is largely driven by the anticipation of interest rate cuts. However, this narrative is now being seriously questioned.
Market Expectations and Future Predictions
According to CME’s FedWatch tool, which is used to gauge market sentiment, 97.5% of market participants expect the interest rates to remain stable. This expectation aligns with recent statements from Mary Daly, the president of the San Francisco Federal Reserve Bank. Daly stated that there is no immediate need for the US to reduce rates.
Despite his overall bearish sentiment, Thielen disclosed that his firm still retains some high-conviction crypto coins. In a previous investor note dated April 15, he speculated that cryptocurrency miners might sell off $5 billion worth of Bitcoin in the months following the halving. Based on historical data, Thielen concluded that the crypto market might experience an extended period of lull.
