Analysts predict that Bitcoin (BTC) will reach its bottom in November 2022 before surging to new all-time highs ahead of its halving. However, they now hold a bearish outlook on risk assets, including technology stocks and cryptocurrencies.
According to a report sent to clients by Markus Thielen, the founder of 10X Research, on Tuesday, he stated that due to the poor performance of the Nasdaq and its high sensitivity to higher bond yields, the company sold all its technology stocks at yesterday’s opening and now only holds a few confident cryptocurrencies. Overall, 10X Research currently holds a bearish outlook on risk assets (stocks + cryptocurrencies).
Traders’ expectations of rate cuts by the Federal Reserve have decreased from six times at the beginning of the year to less than three times, according to data from FedWatch. The sustained high inflation in the United States, along with the resilience of the labor market and the economy, has pushed the 10-year Treasury yield up by 40 basis points this month to reach 4.61%, the highest level since November 2023. The sharp rise in risk-free rates has weakened investors’ attraction to high-risk/high-return assets such as technology stocks and cryptocurrencies.
Markus Thielen pointed out that most of Bitcoin’s upward momentum between 2023 and 2024 came from expectations of rate cuts, which is now facing significant challenges. In addition, inflows into Bitcoin spot ETFs have started to dry up, with data showing that the average net inflow of Bitcoin spot ETFs over the past five days has dropped to zero.
Markus Thielen explained that there is also another group of market observers who believe that once the hype around the halving of mining rewards on the Bitcoin network every four years subsides, the price correction speed may further accelerate.
