Since the beginning of 2024, a strong wave of institutional buying has helped drive Bitcoin higher, but if market fatigue continues, this strength could also amplify the magnitude of a pullback, said Markus Thielen, CEO of 10x Research and former portfolio manager.
In an interview with Bloomberg, Thielen stated that the cryptocurrency market, especially Bitcoin (BTC), is showing clear signs of fatigue after a difficult October, which saw the largest liquidation event in the industry's history. He noted that these losses have exacerbated the potential macroeconomic risks increasingly reflected in Bitcoin.
The inflow of institutional funds, particularly from spot Bitcoin exchange-traded funds (ETFs), has been a key driver of the rally in 2024. However, Thielen warned that if activity continues to slow, the same group of investors may accelerate downward pressure.
“At some point, risk managers may step in and say, ‘You need to clear or reduce your positions,’” Thielen said. “There is a risk that Bitcoin continues to underperform as people need to rebalance their portfolios.”
These comments come as U.S. spot BTC ETFs are experiencing a growing outflow of funds. According to CoinShares, these funds recorded a total of $939 million in withdrawals last week, reflecting a waning interest from institutional investors.
Surprisingly, Bitcoin has underperformed most major asset classes so far this year—a rare pattern following its most recent halving. Despite reaching multiple all-time highs, including a peak of over $126,000 in early October, the world’s largest cryptocurrency has lagged behind gold, tech stocks, and even several Asian stock indices since January.
Nevertheless, Thielen's 10x Research is not entirely bearish on Bitcoin. As reported by Cointelegraph, the firm believes that shorting Ethereum (ETH) is a more effective hedging strategy than shorting Bitcoin itself, and Bitcoin remains the preferred asset for institutional investors seeking exposure to cryptocurrencies.
The recent weakness in Bitcoin is largely attributed to large whales—significant holders of the cryptocurrency—who have been taking profits above the $100,000 level. Alex Saunders from Citigroup told Bloomberg that the number of wallets holding more than 1,000 BTC has gradually declined in recent weeks.
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Original article: “10x Research: Cautious risk managers may turn Bitcoin (BTC) institutional boom into bust”
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