Markus Thielen, founder of 10x Research, has issued a stark warning of an impending significant correction in both stock and cryptocurrency markets, prompting the company to divest from all tech stocks.

Citing persistent inflation, dwindling rate cuts, and rising bond yields as key indicators, Thielen emphasized the critical tipping point risk assets may be approaching. In a recent research note, he stated:

"The primary trigger is the unexpected and persistent inflation. With the bond market now projecting less than three cuts and 10-year Treasury Yields surpassing 4.50%, we may have arrived at a crucial tipping point for risk assets."

Thielen's bearish sentiment follows Bitcoin's recent 9.3% decline, prompting speculation that waning expectations for an imminent interest rate cut may have contributed to the downturn. According to Thielen:

"Most of this 2023/2024 bitcoin rally is driven by expectations that interest rates would be cut, and this narrative is being seriously challenged now."

Investor sentiment reflects heightened expectations for unchanged interest rates, with 99% of market participants anticipating the Federal Reserve to maintain the current 5.25%–5.50% range, up from 93.6% a month ago, per the CME Group’s FedWatch Tool.

Thielen further disclosed that his company liquidated all tech stocks at Monday's trading session open, expressing a bearish stance on risk assets overall, albeit holding a few high-conviction crypto coins.

Meanwhile, concerns over Bitcoin's price overheating persist, with key technical indicators suggesting potential overbought conditions. Bitcoin's relative strength index (RSI) has cooled from its 2024 peak of 88, yet remains at 67 on the weekly chart, indicating possible overheating.

As investor focus shifts to the upcoming Bitcoin halving, dynamics between short-term and long-term holders are evolving. While short-term holders absorb supply, potentially facilitating price recovery, the trend warrants continued observation for sustainable growth, as noted in a Bitfinex research report.