“Our growing concern is that risk assets are teetering on the edge of a significant price correction . 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 ,” Markus Thielen, founder of 10X Research, said in a note to clients Tuesday.
Traders have recently scaled back pricing for 25 basis point Fed rate cuts this year to less than three from six at the beginning of the year, data from CMEGroup show. "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," Thielen noted, adding that inflows into the spot exchange-traded funds have dried.
Since then, nearly $12 billion has flowed into these investment vehicles. However, most flows happened last quarter, powering the cryptocurrency higher, and the demand has faded this month.The 5-day average of the net inflows into the spot ETFs has dropped to zero.
Price Correction Risk Assets Stocks Cryptocurrencies Inflation Bond Market Treasury Yields
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