Stocks and Crypto on Brink of ‘Significant’ Correction: 10x Research

According to Markus Thielen, the founder of 10x Research, the stock and cryptocurrency markets are reaching a critical tipping point and could experience a significant price correction. Thielen cites persistent inflation, decreasing rate cuts, and rising bond yields as reasons for his bearish outlook. He sold all of his investments due to these factors. The unexpected and ongoing inflation is the primary trigger for this potential market correction. With the bond market projecting fewer rate cuts and 10-year Treasury Yields surpassing 4.50%, the risk assets may have reached a crucial tipping point.

Bitcoin’s price has already declined by over 9.3% in the past week, trading above $63,400 as of 9:15 am UTC. Thielen believes that the falling expectations for an interest rate cut could be the reason behind the decline. Market participants now expect the Federal Reserve to maintain interest rates at the current 5.25% to 5.50%. Thielen’s research note also reveals that his company sold all of its tech stocks and holds only a few high-conviction crypto coins. They have a bearish outlook on risk assets.

One technical indicator suggests that Bitcoin’s price may be “overbought” and overheated. The relative strength index (RSI) for Bitcoin is currently at 67, signaling that the asset may be overvalued. The RSI has cooled significantly from its high of 88 in March. The RSI is a momentum indicator used to measure whether an asset is oversold or overbought based on recent price changes.

Investor attention has recently shifted to the upcoming Bitcoin halving, causing long-term holders to start selling and moving their assets off exchanges. As long as short-term holders absorb the supply, there is a possibility of Bitcoin price recovery. A research report from Bitfinex suggests that there has been a shift in the composition of the Bitcoin investor base, with new entrants absorbing the supply sold by long-term holders. This indicates potential room for further price growth if this trend continues.

Markus Thielen believes that the stock and cryptocurrency markets are approaching a crucial tipping point and could experience a significant price correction. Thielen sold all of his investments due to factors such as persistent inflation, decreasing rate cuts, and rising bond yields. Bitcoin’s price has already declined, possibly due to the falling expectations for an interest rate cut. The RSI suggests that Bitcoin may be overheated, although it has cooled from its high. The upcoming Bitcoin halving has caused long-term holders to sell, but as long as short-term holders absorb the supply, there is potential for price recovery.