Bitcoin and Altcoins Face Correction Risk as Rate Cut Expectations Decline

• Crypto and stock markets face potential downturn based on 10x Research analysis.
• Bearish sentiment triggered by fading hopes of interest rate cuts and rising bond yields.
• “We sold everything last night,” reveals Markus Thielen, founder of 10x Research.

Discover why Bitcoin and other cryptocurrencies may be on shaky ground, as economic indicators point to a potential market correction. Get expert insights on shifting market dynamics and what it could mean for crypto investors.

Interest Rate Fears Spark Crypto Market Jitters

Bitcoin and the broader cryptocurrency market are facing a potential “crucial tipping point,” according to Markus Thielen of 10x Research. His bearish outlook stems from persistent inflation, decreased expectations of interest rate cuts, and surging bond yields. This shift in economic sentiment has triggered a sell-off in both cryptocurrencies and tech stocks.

Bitcoin’s Correlation to Rate Cut Expectations

Bitcoin’s recent rally was largely fueled by optimism surrounding interest rate cuts, but that narrative is now under fire. Thielen’s research links Bitcoin’s recent decline to weakening expectations of rate cuts in 2023/2024. Data from the CME Group’s FedWatch Tool confirms this trend as market participants overwhelmingly predict the Federal Reserve will maintain current interest rates.

Technical Indicators Suggest Caution

Bitcoin’s Relative Strength Index (RSI) on the weekly chart signals that the asset may be overbought. While the RSI has cooled down since March, it still suggests caution for traders. However, a recent Bitfinex research report offers a glimmer of hope, noting that short-term holders absorbing the supply of Bitcoin sold off by long-term holders could potentially pave the way for price recovery.

Conclusion

The cryptocurrency market appears increasingly sensitive to macroeconomic indicators and traditional market sentiment. Investors should closely monitor evolving Federal Reserve policy and bond market shifts, as these factors could significantly impact cryptocurrency value in the near term. While technical indicators suggest some overbought conditions, the long-term trajectory of Bitcoin and other cryptocurrencies remains uncertain.