Analyst Who Called Bitcoin’s Pre-Halving Rally to $70K Turns Bearish

“Markus Thielen, founder of 10X Research, expressed worry in a client note on Tuesday over the potential for a substantial price drop in risk assets such as stocks and crypto. The root cause of this apprehension is the unanticipated and prolonged inflation. The bond market now forecasts fewer interest rate reductions than anticipated, while 10-year Treasury Yields have risen above 4.50%. These developments could indicate a pivotal moment for risk assets.”

Last night, we decided to cash in on our tech stocks in the Nasdaq market, as its performance has been disappointing and it’s sensitive to the increase in bond yields. We currently own just a few selected crypto coins that we strongly believe in. In summary, our stance is pessimistic towards both stocks and crypto assets. Thielen stated.

According to data from CMEGroup, traders have recently reduced their expectations for the number of 0.25 percentage point Federal Reserve interest rate reductions in 2021, going from a predicted six cuts at the start of the year down to just three now.

Due to persistent U.S. inflation and a robust labor market and economy, the interest rate on 10-year Treasury bonds, often referred to as “hawkish repricing,” has increased by 0.4 percentage points this month, reaching 4.61%. This is the highest yield since November 2023. The significant jump in this safe investment option has made high-risk assets like technology stocks and cryptocurrencies less attractive to potential investors.

Thielen pointed out that the majority of Bitcoin’s price increase in 2023/2024 was fueled by the belief that interest rates would decrease. However, this perspective is being questioned heavily now. Furthermore, investments into Bitcoin spot Exchange-Traded Funds (ETFs) have noticeably decreased.

In January, the SEC in the United States gave approval for close to a dozen Bitcoin spot Exchange-Traded Funds (ETFs). This means that investors can now gain access to Bitcoin without the need to personally possess and secure it.

Over the past period, approximately $12 billion have been invested in these funds. A significant portion of this inflow occurred during the previous quarter, contributing to the surge in cryptocurrency values. However, the demand for investment has noticeably decreased in the current month.

The 5-day average of the net inflows into the spot ETFs has dropped to zero.

Following the initial excitement, investments in ETFs typically decrease if prices don’t keep rising – a trend that hasn’t occurred since early March. After experiencing losses of up to 17%, some investors may choose to wait and see. (Thielen added.)

After the excitement surrounding Bitcoin‘s quadrennial mining reward reduction on April 20 subsides, some believe the correction in the market will pick up speed. This built-in adjustment decreases the number of new bitcoins created per block from 6.25 to 3.125, thereby slowing down the rate at which new coins are introduced into circulation.

Bitcoin was recently traded at a price of $62,600, marking a substantial 42% increase since the beginning of the year, according to CoinDesk’s figures. Meanwhile, the CoinDesk 20 Index, which encompasses a larger market scope, reached 2119 points during this reporting, signifying a 17% growth in value year-to-date.