Well-known crypto research institution 10x Research published an article titled "We Sold Everything Last Night " earlier today, saying that they have sold all technology stocks and only hold some high-credibility crypto assets. They are currently bearish on risky assets (stocks + cryptocurrencies), believing that risky assets are on the verge of a major price adjustment and may have reached a critical turning point.
The following is compiled by Followin :
We are increasingly concerned that risk assets (stocks and cryptocurrencies) are teetering on the brink of a major price correction. The main trigger is unexpected and persistent inflation. With bond markets currently pricing in less than three rate cuts this year and 10-year Treasury yields above 4.50%, risk assets may have reached a critical turning point.
It is important to understand that trading is an ongoing game with high conviction opportunities. The key is to continually analyze the market and spot those opportunities when they work in your favor. Sometimes we advocate for a full risk approach, enabling you to take advantage of lower level opportunities when the priority is to protect your capital.
While the market has priced in a halving (three) of the original six rate cuts, we are more concerned that the Fed may not cut rates at all this year. Remember, rate hike expectations sparked the November 2021 crypto bull run, and when inflation turned lower in January 2023, a new Bitcoin bull run began. Much of the 2023/2024 Bitcoin rally was driven by rate cut expectations, and that narrative is now being seriously challenged.
The U.S. stock market's lead has become narrower, from a magnificent seven stocks to just three or four stocks supporting the market. However, those large-cap tech stocks are cyclically dependent on flat interest rates. When these companies rely on actually lower borrowing costs to keep their stocks rising, rate cuts alone are not enough.
Bitcoin ETF Inflows Have Dried Up — Who Are the Marginal Buyers Now?
The narrative for a sustainable crypto bull run cannot simply be that American baby boomers buy Bitcoin because BlackRock suddenly launches an ETF. There has to be a broader portfolio allocation diversification approach that includes Bitcoin in the portfolio, a medium-term narrative, not a three- to six-month trade. After the initial novelty hype, Bitcoin ETF flows tend to dry up unless the price continues to rise - and they haven't done so since early March. With a 2% to 17% pullback, these investors are likely to stay on the sidelines.
Importantly, we correlate Bitcoin funding rates with ETF inflows, and this correlation suggests a reliance on traders seeking arbitrage, rather than the stable, long-term investments many hope BlackRock would attract. This is just a theory, but market dynamics seem to confirm it daily, and anecdotal evidence suggests BlackRock’s IBIT ETF is being accepted as collateral for partial margin relief on CME Bitcoin futures.
Low funding rates have led to weak ETF inflows and importantly, lower volumes, especially in large retail markets like South Korea, which is in line with predictions. However, this analysis also holds strong on overall volume. Volumes are down significantly, with Bitcoin peaking shortly after the (Solana) memecoin craze. Solana volumes have quietly grown 30% this month alone. We are noticing more and more air in the market.
As we noted, everyone is seeing signs of a boom. Crypto trading volume in South Korea has surged from $3 billion to $16 billion, double the daily volume of the local stock market.
MicroStrategy stock was previously trading at 80-100% above fair value based on its Bitcoin holdings or our regression analysis on Bitcoin price. MicroStrategy stock has corrected 30% from its high (1,919), but its fair value is still lower at $1,034 (implying a further 29% downside). Based on its 215,000 BTC holdings, its market cap is overvalued by 73%.
Bitcoin 60 days after halving date - initially rebounds in first week 
It’s true that Bitcoin halvings tend to be bullish, at least initially, but much less so than people would have you believe. Bitcoin was up +16% 60 days after the 2012, 2016, and 2020 halvings, but the returns were skewed from the 2012 halving, when the price was up +45%.
As we have written many times, the previous all-time high of 68,300 is our floor, and another important stop is 62,500, as Bitcoin could then gap down to the next support level. We sold all of our tech stocks last night (at the open) as the Nasdaq traded very badly and reacted to rising bond yields. We only hold a few high-conviction cryptocurrencies. Overall, we are bearish on risk assets (stocks + cryptocurrencies). We are lightly positioned, but expect to buy again at better levels.
