Bitcoin is less likely to post the rapid, consecutive double-digit gains seen in earlier cycles as Wall Street trading strategies and profit-taking reshape the market, according to Markus Thielen, founder of 10x Research. In an interview on Cointelegraph’s Trade Secrets, he said institutional traders selling call options after price increases have made dramatic rallies less common.
Thielen said the investors and promoters behind each crypto cycle have changed. In the current cycle, Wall Street participants are more focused on economic data and Federal Reserve decisions, meaning Bitcoin may surge on news before moving sideways as markets await the next major event.
He also questioned how much demand for spot Bitcoin exchange-traded funds represents direct bets on rising prices. Thielen estimates market makers account for as much as half of the $60 billion in net ETF inflows he reviewed. Those firms may hold ETF shares to hedge options trades, so their positions do not necessarily indicate outright buying. His estimate is based on investment managers’ Form 13F filings.
Thielen said early ETF investment also included retail buyers investing through institutions and corporate vehicles, sometimes paying significant premiums to the value of the underlying crypto. He added that institutional investors and sovereign wealth funds could still enter the market.
Despite his reservations, Thielen expects Bitcoin to reach $90,000 by year-end, while allowing for a possible fall into the mid-to-high $70,000s first. He compared the market’s recent recovery with Bitcoin’s rise from around $20,000 to $30,000 in early 2023, saying investors who missed the move may be looking for another entry point.
He expects another Federal Reserve rate increase by December, followed by a more cautious approach to further hikes that could support a Bitcoin rally. The Fed held rates steady at its latest meeting, though two officials voted for a quarter-point increase and its statement said inflation remained elevated.
Thielen expects Bitcoin to outperform Ether. He argues that much of the value created by activity on Ethereum flows to layer-2 networks, while the benefits to ETH holders are less clear. Lower transaction fees, a goal of Ethereum’s development, can also reduce the amount of ETH burned. When issuance to validators exceeds the amount burned, ETH’s supply grows.
He contrasted Ethereum with decentralized perpetuals exchange Hyperliquid, whose assistance fund uses trading fees to buy and burn HYPE tokens. For Ethereum, Thielen said he wants a stronger link between use of the network and financial benefits for token holders.
Sources: Cointelegraph.