The era of consecutive double-digit price surges for Bitcoin has come to an end. Markus Thielen, founder of 10x Research, attributes this shift to the dominance of Wall Street trading strategies and profit-taking by whales.
Institutional traders now routinely sell call options shortly after price rallies occur. Selling these options dampens the extreme volatility spikes that have historically defined crypto market cycles.
The key to this rally dampener lies within the composition of spot ETF fund flows.
Half of ETF Funds Aren’t Bullish Bets
Based on an analysis of investment managers’ Form 13F filings, Thielen estimates that market makers account for up to 50% of the total net inflows into spot Bitcoin ETFs, which have surpassed $60 billion.
Holding large amounts of ETF shares is not a speculative bet that Bitcoin’s price will immediately skyrocket. Market makers buy spot ETF shares primarily as hedging instruments against their options trading positions in derivatives markets.
Due to this hedging mechanism, Thielen expects Bitcoin’s price action to remain largely range-bound between macroeconomic data releases and Federal Reserve interest rate decisions.
The Path to $90,000 and Fed Headwinds
Despite dampened volatility, 10x Research maintains a price target of $90,000 for Bitcoin by the end of 2026. However, the run-up to that milestone could be preceded by a pullback into the mid-to-high $70,000 range.
Downward pressure emerged when Bitcoin dipped toward $76,100 following a $6.3 billion Binance hack. Coinglass data indicates that Bitcoin closed October with a 7.3% decline.
Prospects of a rally toward $90,000 are also tied to US central bank interest rate policies. At its latest meeting, the Fed held the benchmark rate within the 3.75% to 4% target range. Thielen expects one more rate hike heading into December before the Fed adopts a more cautious stance.
Revenue Challenges on the Ethereum Network
In contrast to his outlook on Bitcoin, Thielen maintains a bearish projection for Ethereum. He attributes this to user activity migrating to layer-2 networks, which has eroded base fee burns.
Thielen likened Ethereum to a smooth toll road that users are unwilling to pay high prices to access.
For crypto market participants, this shift in institutional behavior highlights that massive capital inflows do not necessarily send prices soaring unchecked. The influx of Wall Street derivatives has instead placed a new ceiling on Bitcoin’s volatility.
Reported via Cointelegraph.
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Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
