According to Markus Thielen, the founder of 10x Research, the stock and cryptocurrency markets may be on the verge of a major price adjustment or downturn.
Last night, we made the decision to sell all our assets, explained Thielen in a note from the 16th of April. He attributed this pessimistic view to continuous inflation, fewer planned interest rate reductions, and an increasing bond yield.
“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.”
A pessimistic analysis was released following a nearly 10% decrease in Bitcoin’s (BTC) value during the week, causing it to hover around $63,400 as of 9:15 am UTC, based on CoinMarketCap information.
A research note suggests that Bitcoin’s recent drop in value might be due to decreasing anticipation for an imminent interest rate reduction.
“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 recent market predictions, it is widely anticipated that the Federal Reserve will keep interest rates steady. The CME Group’s FedWatch Tool indicates that an impressive 99% of traders now expect rates to stay at their current level between 5.25% and 5.50%, marking a significant increase from the 93.6% recorded just a month prior.
During Monday’s trading, Thielen mentioned that the firm had already offloaded all its tech stocks at the market opening.
“We only hold a few high-conviction crypto coins. Overall, we are bearish risk assets.”
Is Bitcoin price overheated?
A key technical indicator suggests that Bitcoin price may be “overbought.”
On the weekly chart, Bitcoin’s RSI value is at present 67, indicating that the cryptocurrency might be overbought. However, Bitcoin’s RSI has noticeably decreased from its peak of 88, which was reached on March 24 as per TradingView.
An often-used momentum indicator, the Relative Strength Index (RSI), assesses the market position of an asset by quantifying the size of recent price fluctuations, determining if it’s been underbought or overbought.
The upcoming Bitcoin halving has become a major concern for investors, causing some long-term holders to consider selling and transferring their coins away from cryptocurrency exchanges.
If short-term investors continue buying up the supply, Bitcoin’s price may bounce back, based on a Bitfinex study that was recently made available to CryptoMoon.
“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). This is evidenced by the rising Market Value 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, then it could indicate room for further price growth.”
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2024-04-16 12:40