Markus Thielen, the head of research at 10x Research, has issued a cautionary note predicting a looming price correction for risk assets such as cryptocurrencies and stocks.

In an investor note dated April 16, Thielen outlined his concerns, suggesting that the cryptocurrency market is approaching a critical juncture that may precipitate a substantial price correction. He disclosed that his firm has taken preemptive action by divesting from all tech stocks in anticipation of a potential downturn.

"We liquidated our entire tech stock portfolio last night," Thielen wrote, indicating the decisiveness of the firm's response.

Thielen attributed his bearish outlook to several factors, including diminishing prospects for interest rate cuts, escalating bond yields, and persistent inflationary pressures.

The analysis comes on the heels of Bitcoin's recent 11% decline over the past week, with a further 6.7% dip in the last 24 hours. As of the time of writing, Bitcoin was trading at $61,988.93. Thielen linked Bitcoin's slump to diminishing expectations of U.S. interest rate cuts.

"The bulk of Bitcoin's rally in 2023/2024 has been underpinned by expectations of interest rate cuts, and this narrative is now being seriously challenged," he elaborated.

Echoing Thielen's sentiments, CME's FedWatch tool indicates that 97.5% of market participants anticipate no change in interest rates. Mary Daly, president of the San Francisco Federal Reserve Bank, has also downplayed the urgency for rate cuts.

Despite the cautionary stance, Thielen clarified that his firm still holds certain "high-conviction crypto coins." Nevertheless, the overall sentiment remains bearish.

Thielen's warning comes on the heels of a previous bearish scenario he outlined in an April 15 investor note, where he speculated that cryptocurrency miners could be offloading up to $5 billion worth of Bitcoin in the months following the halving. Drawing from historical data, Thielen suggested that the crypto market could experience an extended period of "summer lull."