Markus Thielen, the founder of 10X Research, suggests that the cryptocurrency market may be reaching a critical turning point and potentially experiencing a price correction. He attributes this to the unexpected and persistent inflation, which is the primary trigger for such a correction. The bond market’s projection of less than three cuts and the 10-year Treasury Yields surpassing 4.50% indicate that we may have reached a crucial tipping point for risk assets.
Despite Bitcoin’s pullback, which has kept its price above $28,000, there has been a 9.3% fall in price during the week, with it now trading above $63,400, according to crypto market tracker CoinMarketCap. The research note suggests that the rally in Bitcoin’s price, primarily projected for 2023/2024, was driven by expectations of interest rate cuts. However, this narrative is now being seriously challenged.
The CME Group’s FedWatch Tool reveals that traders expect interest rates to remain unchanged. Currently, 99% of market participants anticipate the Federal Reserve to maintain interest rates at the current 5.25%–5.50%, up from 93.6% a month ago. In light of this, Thielen mentions that his company sold all its tech stocks during Monday’s trading session at the open.
Thielen also highlights that they have invested in very few high-conviction coins and, as a result, are bearish about risk assets. A technical indicator suggests that Bitcoin’s price has become ‘overbought.’ The relative strength index (RSI) for BTC on the weekly graph is now at 67, indicating that it may be overextended due to the recent surge. The RSI, which measures whether an asset is oversold or overbought based on recent price changes, has retraced significantly from its all-time high of 88 on March 24, according to TradingView.
As investors shift their focus to the Bitcoin halving, the decline in hash rate and the sell pressure on exchanges caused by major holders are the current trends to watch.
