Bitcoin Halving Is Not a Bullish Event, Says 10x Research Analyst

Bearish signals are looming over the crypto market these days and will almost certainly push prices down in the short term, well-known research analyst Markus Thielen said.

Thielen, who has previously predicted many bull and bear rallies in crypto, currently sees no catalysts that would bring prices up again, he said on CoinDesk’s Markets Daily podcast.

“We don't have the typical drivers anymore that really brought prices from the $40,000 to the $70,000 region,” he said. The main reason behind this, he added, is the spot bitcoin ETFs, which have seen little to no new inflows over the past few weeks as investors have moved past the initial euphoria of the January launch.

“It seems that a lot of the TradFi investors aren’t biting anymore,” Thielen said.

Both the slowdown of flows into the ETFs and the recent sell off in crypto assets, however, are a result of a much bigger story, argued Thielen. It's the macro environment, he said, that has been and will continue to be the main driver behind prices.

“I think a lot of the bitcoin rally is maybe built on wrong expectations and again," said Thielen. "I think what's really, really crucial is that these ETF flows didn't stop out of the blue, they stopped around March 12 when the consumer price index and when the producer price index came out.”

At the end of last year and into early 2024, traders were betting on multiple interest cuts by the Federal Reserve this year on expectations of a continued downtrend in inflation. That anticipation drove risk assets, such as tech stocks and cryptocurrencies, significantly higher.

However, recent data, in particular the March inflation reports noted by Thielen, has shown that inflation remains well above the Fed's 2% target, leading the central bank to repeatedly voice uncertainty about whether it will indeed be able to lower interest rates this year.

“We need to get the macro headwinds out of the way,” Thielen said. For now, he expects a consolidation period which could last for a few weeks and could push bitcoin down to around $50,000 before coming back up towards the end of the year.

Thielen also cautioned investors about the upcoming halving on April 20th, which many assume will be a wildly bullish event for bitcoin. This expectation stems from the token's previous post-halving cycles which typically saw bitcoin race to new all-time highs.

Thielen, though, contended that those bull moves were largely a result of the positive macro environment, and not driven by the halving itself. The most recent halving in May 2020, for example, came alongside massive monetary and fiscal stimuli surrounding the Covid shutdowns.

“I wouldn't give almost any credit to the halving because I don't think the halving is the big driver,” he said. “It's really the big macro factors.”