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Analytics Firm Warns Crypto and Traditional Finance on Edge, Predicts Major Correction
- Markus Thielen anticipates a significant price correction for stocks and cryptocurrencies, citing stubborn inflation and fewer expected rate cuts.
- Thielen highlights ongoing inflation and bond market predictions as key risks, potentially leading to a critical point for risk assets.
- Recent Bitcoin price drop by US$10K follows a year-long 110% increase, hinting at market adjustment amid inflation concerns.
Markus Thielen of 10x Research said in a research note that stock and cryptocurrency markets may be heading for more trouble. Citing ongoing and sticky inflation and a diminishing chance of rate cuts, Thielen said:
We sold everything last night. Our growing concern is that risk assets (stocks and crypto) are teetering on the edge of a significant price correction.
Markus Thielen, 10x Research Related: Bitcoin’s Direction: Bullish or Bearish as the Halving Approaches?
Thielen mentioned that the main catalyst is the unexpectedly continuing inflation. He noted that with the bond market currently forecasting fewer than three rate cuts and the 10-year Treasury Yields climbing above 4.50%, it seems we might be reaching a critical juncture for risk assets:
Most of this 2023/2024 bitcoin rally is driven by expectations that interest rates would be cut, and this narrative is being seriously challenged now.
Markus Thielen, 10x Research Bitcoin Slides $10K in One Month
Bitcoin has had a very good run, driven by a lot of anticipation of the Spot Bitcoin ETFs in the United States. It rose by 110% in just one year, so the recent correction doesn’t come as a surprise to market observers. The recent correction of 12% constitutes a drop of around US$10,000 (AU$15,592).
Analyst Michaël van de Poppe said Bitcoin is maintaining its support level after a recent minor rejection. If this support breaks, he believes the price might drop to US$55K (AU$85.7K). However, his expectation is that Bitcoin will likely sustain this level and begin a gradual upward trend.
Fellow analyst Rekt Capital said that Bitcoin will likely fall further in the short term, leading many investors to believe that the bull market is over before BTC resumes its upward trajectory.
Fed Again Likely to Delay Cuts
Meanwhile, Federal Reserve Chair Jerome Powell said during a panel discussion at the Wilson Center in Washington D.C. that the Fed will delay interest rate cuts longer than expected due to recent high inflation readings.
Related: Willy Woo Predicts $650k Bitcoin Driven by $2 Trillion Inflows from Asset Managers
Powell highlighted that inflation has not continued to decrease after initially dropping last year, suggesting that it will take longer for officials to be confident that inflation is moving towards the Fed’s 2% target before they consider reducing borrowing costs.
The recent data have clearly not given us greater confidence and instead indicate that [it] is likely to take longer than expected to achieve that confidence.
Jerome Powel, Federal Reserve Chair 
Author
Aaron Feuerstein
Aaron Feuerstein is a freelance writer based in Melbourne. His focus is on decentralised finance and the regulatory space surrounding blockchain. He holds a Master's in Accounting. When he is not studying the latest legal case, he enjoys his time as a modest but eager hobby cook.
