Analyst Turns Bearish on Risk Assets, Including Technology Stocks and Cryptocurrencies
Renowned analyst Markus Thielen, who accurately predicted bitcoin’s bottom in November 2022 and the recent surge to record highs ahead of the halving, has now turned bearish on risk assets, including technology stocks and cryptocurrencies.
In a note to clients on Tuesday, Thielen, the founder of 10X Research, expressed growing concerns about a potential significant price correction for risk assets due to unexpected and persistent inflation. With the bond market projecting less than three rate cuts and 10-year Treasury Yields surpassing 4.50%, Thielen believes that risk assets are teetering on the edge of a crucial tipping point.
Thielen’s bearish outlook has led him to sell all tech stocks and hold only a few high-conviction crypto coins. He cited the poor performance of the Nasdaq and the impact of higher bond yields on risk assets as reasons for his decision.
The recent hawkish repricing in the bond market, driven by sticky U.S. inflation and a strong labor market, has pushed the 10-year Treasury yield to 4.61%, the highest since November 2023. This sharp rise in the risk-free rate has diminished the appeal of investing in high-risk/high-return assets like technology stocks and cryptocurrencies.
Thielen also noted that the recent rally in bitcoin, driven by expectations of interest rate cuts, is being challenged by the current market conditions. Inflows into spot ETFs have dried up, with the 5-day average of net inflows dropping to zero.
The upcoming Bitcoin network’s quadrennial mining reward halving on April 20 is expected to further impact the market, with some observers predicting a correction once the hype fades. The reduction in the per-block coin emission will effectively halve the pace of supply expansion.
Despite these challenges, bitcoin is still trading at $62,600, with a 42% year-to-date gain. The broader market index, CoinDesk 20, is up 17% for the year, standing at 2119 points at press time.
As investors navigate the uncertain market conditions, Thielen’s bearish outlook on risk assets serves as a cautionary reminder of the potential risks ahead.
