According to Marcus Thielen, the head of research at 10x Research, Bitcoin may be transitioning out of its bear market phase.
He notes that the market is evolving “from red to orange,” indicating a reduction in selling pressure and an improvement in liquidity conditions.
Gradual Accumulation Over Defensive Strategies
In a recent interview on May 11, Thielen emphasized that traders are overlooking a crucial factor: it’s not about aggressive buying demand but rather the diminishing number of sellers in the market.
He explained that Bitcoin now requires “very little money” to increase in value since forced liquidations and significant outflows have mostly occurred already.
The analyst highlighted several positive indicators:
- A series of consecutive months showing favorable regime-model readings
- A decrease in Bitcoin outflows compared to capitulation periods from 2022
- A drop in futures open interest following February’s liquidations
- The return of gradual inflows through ETFs and corporate investors like Strategy
Thielen stated that while we are not yet at a point he would call a “screaming buy,” the current technical and on-chain environment favors gradual accumulation instead of defensive positioning.
The Impact of Bitcoin Halving and Inflation Trends
Thielen challenged conventional wisdom regarding Bitcoin halving, arguing that it is demand—not just supply reductions—that ultimately drives cryptocurrency cycles.
He pointed out that historical peaks for Bitcoin have more closely aligned with shifts in sentiment, liquidity cycles, and macroeconomic conditions than with mining halvings alone.
On macroeconomic risks, Thielen cautioned that inflation could rise back toward 5.5%, which might lead the Federal Reserve to maintain restrictive policies for an extended period. However, he also mentioned potential benefits for Bitcoin stemming from AI-driven capital expenditures, higher nominal growth rates, and ongoing inflationary pressures related to hyperscaler infrastructure expansion.
The Significance Behind These Insights
Thielen believes we are witnessing a bottoming process for Bitcoin characterized by low trading volumes rather than panic buying. He noted that selling pressure from hedge funds and leveraged traders seems to be diminishing as well.
Additonally, he suggested that any forthcoming major price increases may rely more on steady capital inflows rather than sudden macroeconomic catalysts. In his view, there is greater optimism surrounding Bitcoin compared to altcoins due to weak flows and persistent selling pressures across much of the broader cryptocurrency landscape.
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- What does it mean when analysts say bitcoin is moving from ‘red’ to ‘orange’?
This indicates an improvement in market conditions as selling pressure decreases.
- If there are fewer sellers left in the bitcoin market now what does this imply?
This suggests less resistance against price increases since it takes less capital for prices to rise.
- How do inflation trends affect bitcoin?
Rising inflation could keep interest rates high but might also drive investments into assets like bitcoin due its perceived value retention during economic uncertainty.
- Why should investors focus on gradual accumulation instead?
Gradual accumulation allows investors time assess changing conditions without succumbing panic or FOMO (fear missing opportunities).
- Why should investors focus on gradual accumulation instead?