Markus Thielen, the founder of 10x Research, believes that both the stock and cryptocurrency markets are approaching a critical turning point that could lead to a significant price correction. Thielen stated that his company has sold off all its holdings due to persistent inflation, decreasing rate cuts, and a rising bond yield.
Bitcoin’s price has already experienced a decline of over 9.3% in the past week, reaching a level above $63,400. According to Thielen’s research note, this decline could be attributed to the diminishing expectations for an impending interest rate cut.
Market participants are currently anticipating that interest rates will remain unchanged, with 99% of them expecting the Federal Reserve to maintain rates between 5.25% and 5.50%. This is an increase from 93.6% a month ago, as reported by the CME Group’s FedWatch Tool.
Thielen also mentioned that his company sold all its tech stocks at the beginning of Monday’s trading session. He emphasized that the market is experiencing an overheated situation, as indicated by Bitcoin’s relative strength index (RSI), which currently stands at 67. Although the RSI has cooled down from its peak of 88 in March, it suggests that Bitcoin may still be overbought.
Investor focus has shifted to the upcoming Bitcoin halving, leading long-term holders to sell and move their assets off exchanges. However, if short-term holders can absorb the supply, there is a possibility of a price recovery, as stated in a Bitfinex research report shared with Cointelegraph.