TL;DR
- Market Sell-Off: Markus Thielen of 10x Research has liquidated all tech stocks due to fears of a significant market correction, driven by persistent inflation, reduced rate cuts, and rising bond yields.
- Bitcoin’s Price Drop: The recent decline in Bitcoin’s value is linked to diminishing expectations for an interest rate cut, challenging the previous rally’s narrative.
- Investor Caution: Thielen advises caution as the market approaches a potential downturn, with a pivotal period ahead for both stock and cryptocurrency markets. He remains bearish on risk assets, holding only select high-conviction crypto coins.
Markus Thielen, the founder of 10x Research, has announced that his firm has sold all its tech stocks. This drastic move comes in the wake of Thielen’s growing concern that risk assets, including stocks and cryptocurrencies, are teetering on the edge of a significant market correction.
Thielen wrote that they sold all their assets last night due to continuous inflation, reduced interest rate cuts, and increasing bond yields. The main reason for their bearish outlook, as stated by Thielen, is the unexpected and ongoing inflation.
The bond market is currently expecting fewer than three cuts, and with 10-year Treasury Yields rising above 4.50%, Thielen thinks we may be at a critical moment for risky investments. This negative research update follows a 9.3% drop in the price of Bitcoin (BTC) last week, with trading reaching over $63,400.
Bitcoin’s Price Drop and its Relation to Market Correction
Bitcoin’s recent drop may be due to decreased optimism about an impending interest rate reduction. According to Thielen, much of the rise in Bitcoin prices over the next couple of years was fueled by the anticipation of interest rate cuts, but this belief is now being questioned.
Traders are currently expecting rates to remain unchanged — 99% of market participants expect the Federal Reserve to maintain interest rates at the current 5.25%–5.50%, up from 93.6% a month ago. Thielen added that his firm only holds a few high-conviction crypto coins. “Overall, we are bearish risk assets,” he concluded.
Thielen has once again cautioned about the future of Bitcoin. In a note to investors on April 15, he suggested that cryptocurrency miners might sell off $5 billion in Bitcoin after the halving. Based on historical trends, he predicted a possible “summer lull” in the crypto market.
As the market braces for this potential downturn, investors are advised to exercise caution and closely monitor the situation. The coming weeks could prove pivotal for both the stock and cryptocurrency markets.
