10x Research Founder Warns of Impending Market Correction

Markets for risk assets, including cryptocurrencies, are approaching a “critical turning point” that could lead to a significant correction, according to Markus Thielen, head of 10x Research.

We Sold Everything Last Night ->

?1-11) Our growing concern is that risk assets (stocks and crypto) are teetering on the edge of a significant price correction (see yesterday’s report). The primary trigger is the unexpected and persistent inflation. With the bond market now… pic.twitter.com/EvHyvw1du5

— 10x Research (@10x_Research) April 16, 2024

“We sold everything last night. […] The primary trigger is unexpected and persistent inflation,” the report states.

Given that the bond market forecasts fewer than three cuts and the yield on 10-year Treasury bonds exceeds 4.5%, risk assets are likely to face a price drop, the analyst believes.

Thielen argues that much of the crypto rally in 2023 and 2024 was driven by expectations of a rate cut in the US, but this scenario is now “seriously in doubt.”

According to data from the CME FedWatch Tool, 97.5% of market participants believe that the Fed will keep the interest rate unchanged at the upcoming meeting on May 1.

Thielen added that the company sold all its tech stocks at the opening of the trading session on April 15, leaving only “a few cryptocurrencies in which it has strong confidence.”

“A month ago we wrote that inflows into bitcoin ETFs would slow, and by now this has become evident to other market participants. We also believe that many fund inflows represent arbitrage positions (25-30%), rather than outright longs. This situation exaggerates the positive signaling effect,” he noted.

According to SoSoValue, spot ETFs based on the first cryptocurrency recorded outflows of $55 million and $36 million over the last two trading days.

Previously, 10x Research warned of a potential $5 billion bitcoin sell-off by miners. The negative effects of this event could last from four to six months.

Earlier, Marathon CEO Fred Thiel expressed confidence that the upcoming block reward halving is already priced into bitcoin.