Ramazan Eles 
Markus Thielen, founder of research firm 10X Research, is raising red flags for risk assets like tech stocks and cryptocurrencies, including Bitcoin (BTC). This comes after previously predicting Bitcoin’s bottom in November 2022 and its recent pre-halving surge to record highs.
Rising Treasury Yields Prompt Portfolio Shift
Thielen attributes his bearish stance to rising Treasury yields, a sign of investor concerns about inflation.
“Our growing concern is that risk assets (stocks and crypto) are teetering on the edge of a significant price correction,” Thielen stated in a client note. “The primary trigger is the unexpected and persistent inflation. With the bond market now projecting less than three cuts and 10-year Treasury Yields surpassing 4.50%, we may have arrived at a crucial tipping point for risk assets.”
Selling Tech Stocks, Holding Select Crypto
Thielen’s bearish outlook led him to sell all his tech stocks and maintain only a few “high-conviction” cryptocurrencies in his portfolio.
Market expectations for Federal Reserve rate cuts have dwindled significantly this year. Initially priced in at six cuts, traders now anticipate less than three due to persistent inflation and a strong U.S. labor market and economy.
This “hawkish repricing” by the Federal Reserve has driven up 10-year Treasury yields to 4.61% – the highest since November 2023. This rise in risk-free rates makes high-risk assets like tech stocks and cryptocurrencies less attractive to investors.
Bitcoin Rally Fueled by Rate Cut Expectations Now Fizzles
“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,” noted Thielen. He further pointed out the decline in inflows into spot Bitcoin ETFs (exchange-traded funds).
The approval of nearly a dozen spot Bitcoin ETFs by the SEC in January allowed investors to gain exposure to Bitcoin without directly owning and storing the cryptocurrency. While these vehicles attracted nearly $12 billion in investments, the flow has stalled this month after fueling the earlier Bitcoin price surge.
Bitcoin ETF Hype Wanes, Net Inflows Dry Up
The 5-day average net inflows into spot ETFs have dropped to zero. Thielen suggests that “after an initial novelty hype, ETF flows tend to run out unless prices continue increasing—which they have not done since early March. With two—to 17% drawdowns, those investors might stay on the sidelines.”
Post-Halving Correction on the Horizon?
Some analysts predict a further correction after the hype surrounding the upcoming Bitcoin halving event on April 20th fades. This pre-programmed event will cut the block reward for miners in half, effectively reducing the pace of new Bitcoin entering circulation.
Despite the recent bearish sentiment, Bitcoin is still up 42% year-to-date, trading around $62,600. The broader crypto market index, CoinDesk 20, also remains positive for the year, currently at 2119 points.