10xResearch Attributes Bitcoin's Decline to Rising Inflation, Not Strategy

10x Research has attributed Bitcoin's recent dip below $60,000 to significant institutional sell-offs linked to rising inflation, rather than the actions of Strategy, according to analyst Markus Thielen. The anticipated consumer price index (CPI) data could influence market recovery, he noted.

Key Insights:

• Markus Thielen from 10x Research highlighted that net redemptions of $5.4 billion from U.S.-listed bitcoin ETFs are a major contributor to Bitcoin's price decline.
• Following the release of unexpected inflation data in April, the cryptocurrency market saw substantial selling pressure.
• Thielen cautioned that if May's CPI exceeds 4%, the chances of Bitcoin recovering could diminish.

Recently, Bitcoin's value dropped to BTC$63,871.14, fueling discussions about its market dynamics. Thielen clarified that the focus on Strategy's actions, which involved acquiring about $2 billion in Bitcoin, has overshadowed the larger issue of institutional selling.

In a report to clients, Thielen emphasized that the market's interpretation regarding the sell-off has been skewed, asserting that the problem lies more with ETF flows than Strategy's selling activities. He stated, "The market has misdiagnosed this selloff. Strategy is not the problem."

The upcoming CPI report is crucial, as 10x Research predicts an inflation rate of 4.3%, which could influence Federal Reserve policies regarding interest rates. If inflation remains above expectations, it may signal prolonged higher rates, which would adversely affect risk assets like Bitcoin.

Despite Bitcoin appearing technically oversold, Thielen warned that short-lived price fluctuations should not be mistaken for a sustainable recovery. He anticipates a possible small rally, but cautions that it could falter if inflation readings are higher than expected.

The current flow dynamics in the crypto market reflect weakness, with stablecoins showing outflows of approximately $1.7 billion last week. Thielen indicated that monitoring ETF flows will be essential in predicting Bitcoin's future price movements, stating, "Institutional ETF flows are driving price. Follow the money, not the narrative."