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Our analysis of the situation
In a whirlwind of economic uncertainties and market turbulence, Markus Thielen of 10x Research has stepped into the spotlight once again, showcasing a savvy pivot in response to mounting financial pressures and market instability.
Thielen, a luminary in the analysis sphere, recently disclosed a significant recalibration of his crypto strategy, marking a departure from the once-bullish outlook on risk assets. The catalyst for this seismic shift? A looming specter of inflation that has cast a pall over both technology stocks and cryptocurrencies.
Speculations from the Bank of America paint a disconcerting picture of a CPI headline inflation barreling towards 4.8% by the November 2024 election. With month-over-month CPI inflation averaging 0.4% over the past three months, the acceleration appears to be hurtling towards a rate double the Federal Reserve’s 2% inflation target.
So, why the sudden divestment from crypto and risk assets? According to 10x Research, the decision was spurred by a disheartening tilt in economic indicators. The US bond market, once a bastion of optimism, has now projected a tempered expectation of less than three Federal Reserve rate cuts this year, a stark contrast to earlier rosier forecasts.
As if this weren't enough, the 10-year Treasury Yields have surged to a dizzying 4.61% this month, the loftiest rate since November 2023, casting a long shadow over the investment terrain for risk assets such as technology stocks and cryptocurrencies.
“We sold all our tech stocks last night as the Nasdaq is trading poorly, and we only hold a few high-conviction crypto coins. Overall, we are bearish on risk assets,” Thielen revealed in a note that reverberated through the financial spheres.
This cautionary stance gains further credence from the lackluster performance of US-listed spot Bitcoin ETFs. Despite a promising surge in Bitcoin prices following the SEC’s approval of nearly a dozen such ETFs in January, the tide has now ebbed, with the five-day average inflows plummeting to zero this month.
Thielen’s sagacious reflections also encompass the imminent Bitcoin network halving in April. Despite historic surges in bullish sentiment and price hikes following such events, Thielen remains skeptical of any potential upticks amidst the current economic backdrop.
In the face of critique for what has been deemed as erratic decision-making, Thielen staunchly defended his firm’s trading strategy, underscoring the tempestuous nature of crypto trading and the indispensable need for nimble responses to swiftly altering market conditions.
As BTC traded at $63,045 at press time, Thielen signed off with a pledge for a resolute re-entry into the market at the opportune moment, concluding with a sanguine “Will buy back with both hands at 52,000 – promise.”
In navigating these treacherous crypto waters, it seems 10x Research is banking on flexing its mettle in the face of adversity, waiting for the opportune moment to dive back in and potentially ride the markets to more promising shores.
Disclaimer: Our articles are NOT financial advice, and we are not financial advisors. Your investments are your own responsibility. Please do your own research and seek advice from a licensed financial advisor beforehand if needed.
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