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Markets Outlook
Why Markus Thielen's BTC Year-End Target Is Capped at $142K and His $5K ETH Prediction
00:23:21
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- [00:00]
Marcus Thielen
This year we have seen $206 billion being moved into bitcoin this year. And if we see this acceleration or the the same pace basically until year end, there would be another 140 billion, and that would get us to 142,000, which is sort of like the most realistic price target right now.
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Jen Sanasi
Hey, everyone, I'm Jen Sanasi, and this is your Monday market outlook. Joining me today is 10X Research founder Marcus Thielen. Marcus, welcome back.
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Marcus Thielen
Hey, thanks for having me.
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Jen Sanasi
All right, Marcus, I want to start here. What are you watching this morning?
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Marcus Thielen
Well, of course we're watching, you know, how far we can rebound. I think we sort of expected this kind of drop. I think it surprised a lot of people. You know, we have been actually bearish for the last kind of like week or two. And I think we, you know, beginning of the week we're seeing some rebound, but we don't think it's going to last. We don't think a lot of new money is entering, you know, the market. And of course, we have also entered August. And August is seasonally usually a very weak month. So, you know, looking back the last 10 years, August went down seven out of the last 10 years. So the seasonality is quite, quite weak. There was, of course, one big outlier. Some people argue, of course, the post halving August have usually seen some positive returns, but we don't think the halving really matters that much anymore. And so, you know, we don't think really a lot of capital is going to be deployed this month. And therefore we were more looking for some cautious situation. And I think we got this right now, and I think we seeing this rebound and then we're going to sell off a little bit more.
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Jen Sanasi
I know. I read your remarks saying that folks who are looking to buy should wait for maybe around the $112,000 level. I think we got close to that level. Talk to me about what, what your outlook is from here. How low do you think we're going to go?
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Marcus Thielen
So when you look back, you know, since this bull market started, bitcoin actually has moved in 16,000 point increments. And so the last big increment was really this 106,000. And you probably remember the range 90 to 106. And then of course, we went from, you know, 106 to 122. We shot overshot a little bit. So we went to 123 very briefly, just for literally a few hours. But we basically have been in this range and, and of course, before that range we, you know, before the 90 range we sort of like were in this early 73,000. So that was the only range that was a little bit wider. But, but you know, we have been moving in these increments so we think we're going to stay and stick with this in this range. But the area between 106 to 110 has a lot of support in it. So we don't think it's going to really break this level. I think we want to sort of like bounce around kind of, you know, everybody's going to be disappointed because volumes are already going lower, the funding rates have already come in now. And I think that's, you know, as you correctly said, you know, that report we published was a week ago, so way ahead of, you know, the sell off that we, that we saw really. And I think really we're seeing this kind of like bumping around a little bit, but with no clear catalyst on the horizon. And I think we have, you know, come from the, you know, the US Crypto Week there was of course, the big, you know, major, you know, catalyst really. And post that event, you know, everybody was focusing really then on these, you know, White House Digital Asset Report. There was sort of like a, sort of like a nothing burger, still not released, how many bitcoins, you know, the US Government actually holds right now. And of course we thought that this report was delayed more from a tactical timing perspective because that's when really, you know, Congress is almost in the summer recess, you know, Senators is away, so not much is going to happen. And that's why I think we thought there's not a lot of catalysts in the market. We have this weak seasonality and that's sort of like where we started to look more for the technical ranges. And as you correctly said, you know, what are we watching? It's really that we're watching this rebound maybe maximum to 116. We don't think it's going to go beyond that, you know, for, for the next couple of, of weeks probably. And so we think for the next week or two, the more the, the downside is really towards the 106, 108 level ideally. And, and that's why we definitely want to get back in because we still think, you know, later on this year we're going to see higher prices.
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Jen Sanasi
On this year once we recover from that 106, $108,000 level. Where do you see the price of bitcoin going? And let's take it to the end of the year.
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Marcus Thielen
So end of the year I think really maximum is really 140,000 thousand. And you know, as, as, you know, you know, we have come up with some really, you know, really bullish targets in the past, but they usually have been met. And I think realistically when we look at the actual amount of money that's flowing into Bitcoin and has flowed, has, has moved, been moved into Bitcoin. So we have a little bit more than US$1 trillion has been moved, you know, since its inception with a market cap of, you know, 2.4. So over the last seven years we calculated it's a multiplier of actually 2.8. And this year we have seen around 216 billion or 206 billion, actually $206 billion being moved into bitcoin this year. And if we see this acceleration or the same pace basically until year end, there would be another 140 billion and that would get us to 142,000, which is sort of like the most realistic price target right now. And anything really beyond that, for example, if you want to, you know, projected price target of 170, this would really demand re acceleration of like 150% of the pace of, of the inflows we have seen this year. And of course we had a lot of positive news flow already within the market. You know, all these treasury companies that are probably buying less and less, we would assume simply because the volatility goes down of Bitcoin. And therefore I think it seems to be that these treasury companies are unable to want to raise the same amount of capital that they have been raising before. For example, when we look at the 30 day raising capital window of microstrategy around sort of like the December period, they raised $15 billion in a time of like 30 days. And you know, up until a few days ago it was just 1.5 billion. So it's a massive difference. And we think this is highly correlated to the decline in bitcoin volatility, which is now, you know, less than 28% for the last 30 days and realized volatility. And that Again is correlated to the nav of micro strategy. And therefore they have of course to raise different kind of share classes to really pump in new money into the market. But otherwise they have really not much, you know, influence on the bitcoin price, you know, per se, because there's all these other factors and these other factors are sort of like offsetting the inflow. So 142 is most realistic based on the projecting, you know, based on the inflows we have seen year to date so far. And if we just extrapolate this data then we would, would get to 142 and it's going to be very difficult to project how we're going to see an acceleration of this pace. So we think 142 is really the maximum cap. You know, the higher probability is that we kind of finish between 130 to 142. This seems to be very low and a lot of people were disappointed when we came up with our year end target, you know, earlier in the year, which was 140 to 160. But it seems like we sort of like maybe not even reaching the lower level of that band.
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Jen Sanasi
Marcus, your take is a little bit more conservative than many of the guests I've had on in the past few weeks. They have a very bullish outlook on the price of bitcoin by the end of the year.
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Marcus Thielen
Well, let me say this. I mean, you know, we are not here to, you know, to pump the bitcoin price. We're here to really, you know, provide valuable insights for our subscribers and we want to be, you know, most realistic. We're not here, you know, to come up with unrealistic price targets that cannot be backed up by data. And all of our analysis has always been, you know, you know, you know, you know, founded really within the, the data framework. And right now if you really want to project the bitcoin price of, you know, as I said, let's say 170,000, which doesn't seem even that high for a lot of people. But I tell you, you need to have 150% of the inflows you had already year to date. It's going to be very difficult to achieve unless something major really happens, you know, like rate cuts or anything. But a lot of those people have also said beginning since beginning of the year the Fed has to cut. But you know, obviously they didn't cut and obviously they're holding relatively firm. I mean, we have to see if we are like in a similar scenario as last year. Where, you know, the market sort of like fell a, you know, fell apart really and forced the Fed's hand to cut by 50 basis points. But again, if that would happen, the market, the equity market specifically need to really start to price that in. So it was really the decline in the stock market, so the decline in risk assets, including Bitcoin, that sort of forced the Fed's hand. So if we want to, you know, have a scenario where the Fed is sort of like emergency cutting in September, then of course we need to see risk assets sell off. And I think we started beginning of the year at 94,000. We are actually not that high above that level. Despite all these bullish catalysts that we have seen, there is a massive bullish catalyst developing under the surface that not a lot of people are looking at. And I think the market will eventually shift to that bullish macro factor really. But all these other factors that people like to highlight, for example, money supply, it's, it's correlated sometimes, but it's not correlated over a longer period of time. So, you know, we can go back and say, you know, the last 18 months it was, you know, correlated, but the last 24 months it was not. That's why everybody just shows the last 18 months correlation and not anytime longer. And there's also no persistency that the correlation is, for example, with a three month lag that, you know, that works currently, but it didn't really work a few years ago. So it changes over time. So we look more at the real money inflows and not hypothetical inflows that are going through, you know, various factors. But again, if we really, you know, dissect the data, the most likely scenario, you know, how far we can go is 142. And that's, you know, still good if we end up there, right, compared to the last two years. But, but we have to see.
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Jen Sanasi
You just said there's, there could be a massive bullish catalyst bubbling underneath the surface. And I think that you might be talking about something that you shared on LinkedIn recently. Recently I know that you shared a chart. You said key technical levels are converging with overlooked macro dynamics. Talk to me a little bit about what that means. What's bubbling underneath the surface? What should people be looking out for?
- [11:04]
Marcus Thielen
Yeah, it's of, it's of course, you know, anything around, you know, the debt issuance, it's not really the money supply, it's not really the Fed policy. Of course, we think the Fed policy is going to become a little bit more dovish. Of course, a lot depends on the next labor market supply report. But again it will be if the market prices in a really, you know, bearish scenario that's going to, you know, force the Fed's hand. But the interesting aspect is really when, you know, the big beautiful bill was passed, there was also a $5 trillion debt increase, a debt ceiling increase really, you know, factored in. And if I ask you, you know, how much, you know, are we progressing towards this 5 trillion feeling you might not know, but, but bitcoin actually started to jump from this 110,000. You know, that kept it, you know, up until, you know, a bit over a month ago for some time. Then we started to really accelerate it and that was really the breakout trigger. It was not money supply, it was not anything about, you know, the crypto week or anything, you know, other factor really it was really when the market became aware that here was a big beautiful bill passed. It had a 5 trillion debt cell ceiling increase. And the first number that came out was literally a $380 billion increase on the first day and another 30 billion billion dollar increase. So over two days there was $410 billion already increased. And so far we actually 700, you know, and something billion dollars increase. So we already 14% into this debt ceiling factor. And I think if the market becomes more and more focused on that number, that, that really there is a total, you know, I guess, you know, debt explosion happening right now, right. Despite the US is collecting, you know, all these tariffs and everything. But they seem to be like relatively small toward this number. Because if we extrapolate even this, you know, $700 billion that has been increased already in debt and you know, we have gone literally from no debt increase for the last couple of months before that big beautiful bill was passed, before the debt ceiling was increased, then we actually, we might end up with another seven months until we run out of this 5 trillion number, which is of course massive and you know, unexpectedly and. But we also thought that maybe over the summer there will be less debt issuance. You know, we might have seen the last spike which was like a day of like 110 billion, which is just like, you know, enormous because when you add this all up, we might end up, you know, the debt ceiling increased, you know, just like a month ago, but we might hit the debts, you know, know the new debt ceiling. And within eight months, you know, if you just kind of project this and I think that's going to be where the number where, where the market is going to look at okay, what's our macro hedge here? What's our protection? Because it cannot be really the US dollar, it cannot be really like foreign currencies because you know, they have, you know, not a lot of growth. You know, Europe has of course a lot of trouble right now with, I assume with, you know, the, you know, the tariff deal that they sort of like agreed with and you know, still the Ukraine war. And of course there's some, you know, scenario around there that, that is actually very negative for Europe. So there are not many hedges. You know, gold can be a hedge, but I think Bitcoin can be also a primary hedge when the market starts to focus more on the debt ceiling issue or the debt increase issue versus for example the labor market.
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Jen Sanasi
Right now, Marcus, I want to pivot now and talk about Ether. We saw Ether outperforming Bitcoin for a few weeks there. A little bit of a pullback now. What's your short term outlook for Ether? And then also give me how you think Ether is going to perform heading towards the end of the year.
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Marcus Thielen
Yeah, you know, very difficult. It's very difficult because you have of course a lot of momentum from the Ethereum treasury companies. You know, there's a lot of pipe deals being done that are not really benefiting a lot of the smaller shareholders. You know, as you know, you had some of these, you know, leading figures in that space, you know, on your show recently. But the, the fundamentals and within Ethereum have actually not, not changed. So we have seen around you know, 70% increase over the last month in the Ethereum price. We have also seen close to 70% trading volume being increased. But we have seen only 5% of revenues in the Ethereum ecosystem being generated more, only 5% over the last month. We have only seen sort of like, you know, 3, 4% of user activity actually being, you know, increased. So there's sort of like this, this divergence right now between the, the, the price, the narratives from the treasury companies. And of course they like to say that a lot of, you know, it's, it's really the, the, you know, the, the blockchain that's going to support and power all the stable coins. But it's going to be, you know, it's going to take some time and the question really is how much money is really generated on the Ethereum within the Ethereum network. And it doesn't seem so far, you know, so much right now. And I think that's why it's difficult. I mean, we sort of like caught this move more from a technical perspective. But we didn't really, you know, buy into it, you know, fundamentally. And I think that's why it's very difficult to, to call. I think, you know, if we retrace some, you know, some lower, you know, so what's the 3200 level? It's probably like a level, you know, to buy because then it can go up to 4,000 again. But I think it's just, you know, it requires a lot of money being, you know, moved in the market and that has really been driving up the price. But I think with, you know, with, with a lot of cryptocurrencies when you, when you don't see the fundamentals changing. And I think that's why, you know, a lot of people have been trying to call the altcoins rally, the altcoin rallies, but they're never really sustained because nothing really changed fundamentally. And I think that's really the difficult part here where Rita sort of, you know, look at more from a technical perspective. And you know, we noticed that Ethereum sort of like ran up to the 3850 level, which was sort of like the, you know, one of the previous peaks over, you know, from, from a year ago. And we thought this is where the technical area might be sort of like peaking out. So we're training it more from a technical level. But I think, you know, unless we have, we're seeing a lot of the underlying changes on the fundamental side and I think that's the difficulty here because yes, the treasury companies can buy and, and they can buy, you know, a billion or two or three. But again, the market trades, you know, you know, 20 to 30 billion a day. So it maybe it might actually not make so much influence unless really it's really a lot of people buying into the narrative. And the one thing that we also, you know, found out is actually that, you know, as I was saying, Ethereum went up, up until a few days ago, was up like 70% in one, in one month. But more than 100% of that move came actually during Asian trading hours. So it was actually Europe that sold Ethereum, but it was Asians that were buying it. And we have seen of course, a lot of increase in trading volumes, for example, in Korea and the retail heavy market of, of Korea where for example, like even XRP was number, number one Token traded for 16 consecutive days. So we saw this explosion there. But volumes actually have come off. I mean, we look at, you know, you know, volumes on up it. We look at also volumes on spot volumes on Binance. They all have come in and they all have come in with the funding rates also coming in. So there is a lack of momentum going on right now and I think that's why it's very difficult to project that this narrative that we're seeing right now around Ethereum or some of the themes around these, you know, treasury companies are going to sustain for much longer on a short term basis. Of course it can pick up again when more institutional money comes in. But I think a lot of institutional investors tend to sort of take off the August and, and especially I think right now, wait with maybe if there's some, you know, Trump, Putin, you know, narrative developing or if there's some, you know, some other stuff happening on the US labor market that everybody sort of gets confused right now. So I think there's a lot of uncertainties and I think that's why that narrative of the Ethereum, you know, treasury companies might be running out short term basis.
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Jen Sanasi
Some of the guests who've joined me on the show have said, you know, 10 to 15,000 by the end of the year. It sounds like you're saying that's maybe unlikely unless we start to see a lot more momentum in the Ethereum ecosystem.
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Marcus Thielen
So that of course, you know, the 10 or 15,000 price target on Ethereum, I think that was primarily based on the valuation that Circle was, you know, managed to achieve, you know, really well you know, after the, after the ipo. And I think, you know, nobody as, as, you know, Coin, Coinbase tried to buy, you know, circle for like 5 billion. So they must know sort of what the fair value is. But of course it ran up to, you know, 40, 50 billion and has also come in now, you know, quite, quite a bit. And I think so, so the argument was that when you look, you know, at what price earnings multiple, Circle was trading and I think Circle is trading, you know, well above, you know, a p ratio of 100 versus the, you know, the Coinbase or Galaxy or some of the more, you know, established companies, even like Robin Hood, they tend to trade around like a 40 times PE ratio. So of course, even in this, you know, exuberant rally that we have seen the last couple of weeks that the PE ratio have expanded but it's usually a PE ratio of like 40 that seems to be more realistic versus, you know, circle had a PE ratio of 100 or 200, you know, depending on what, what, you know, what kind of like frame you look at if you look at this year or next year projections. But Here the argument was really made that, okay, Circle trades at such a high value, it must be all these investors like, you know, adjusting really their, their assumption of, of where the level can go. And therefore, if you look at the same revenue that Ethereum is generating, that's where you can come up with a price target of 15,000. But of course, the price itself of Ethereal has, you know, dropped, you know, I think almost like 50%. And you know, some of these other treasury companies, the price targets have also come in massively. And again, I think this is highly correlated to the volatility that we're seeing for Bitcoin and these underlying shares because they need the volatility to then raise more capital based on the assumption that they really have this outstanding, know, right tail, basically based on the volatility factor. But if that comes in, and as it comes in, as we're going into a slower summer, then I think the right tail will be cut off a little bit. And that's what we have been seeing already where Circle has already repriced to, you know, a lot lower level. But we also seeing the same, for example, with Kakao Pay in Korea that also, you know, came in, you know, quite a lot. And you know, some of the leading investment banks, they have a price target that is still 50% lower as the current, you know, circle price target. And that's why I think you can make the argument, well, yeah, maybe the price target of Ethereum of 15,000 was correct, but now it should be 10,000. And if you look at some of the, you know, investment banks that are covering now, Circle, if you look at, you know, their price target, then actually the price target of Ethereum should be maybe like at 5,000. I think that's how you can sort of like, you know, break it down.
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Jen Sanasi
All right, Marcus, we do got to let you go, but I have one more question for you. You know, you just brought up Circle Robinhood. We got Q2 earnings recently. What crypto equities are you watching? What should investors be watching after those earnings came in?
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Marcus Thielen
Yeah, we were, you know, we were initially in May. We were quite bullish on, for example, on, on Coinbase, kind of like months ago, we turned, we turned bearish for two factors. First, it was massively overvalued based, you know, based on reaction analysis with, with, with Bitcoin, it was more than 20% overvalued. And historically that was sort of like the maximum cap after the earnings last week. We are sort of like fairly valued here right now versus Bitcoin but relative to trading volumes, Coinbase should drop another 10%, if not 15%. And if we see even lower volumes, then I think it should drop probably even a little bit more. But I think, but I think if you drop to those levels, then I think it would offer, like, another opportunity, you know, for for Q4 rally, which we still project, but we still expect. So we think it's sort of like a tough environment right now until sort of like September. But I would definitely position then in September for a big Q4 rally that we still project. And again, some of the crypto equities might then trading at, you know, quite below fair value levels. And that's usually when we want to get in from a disciplined investment perspective.
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Jen Sanasi
Marcus, it's always a pleasure hearing your insights. Thanks so much for joining me today.
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Marcus Thielen
Thanks for having me.
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Jen Sanasi
Thanks, Marcus.