Bitcoin's era of consecutive double-digit price surges is over, with Wall Street traders and profit-taking whales reshaping the market, according to Markus Thielen, founder of 10x Research.

Institutional traders selling call options after rallies have made the violent price explosions of earlier years less common, Thielen said in the latest episode of Cointelegraph's Trade Secrets podcast. Call options give buyers the right to purchase an asset at a preset price, with sellers collecting an upfront premium that stays theirs as long as prices stay below that level. Thielen is also the author of Crypto Titans, a history of the industry, and writing the book led him to notice that each market cycle brought a different cast of promoters pitching crypto to investors.

“Every cycle had actually different promoters, and different promoters bring in different investors,” he said.

This time, the promoters come from Wall Street, where investors trade on economic data and Federal Reserve decisions. Thielen said he expects Bitcoin to rise quickly on news and then spend time crab walking across the chart before the next big macro event.

Who's really buying Bitcoin?

Thielen estimated that market makers account for up to half of the $60 billion in net spot Bitcoin ETF inflows he analyzed. Spot Bitcoin ETFs, which began trading on US exchanges in January 2024, change hands like ordinary shares, giving brokerage clients exposure to Bitcoin without an account on a crypto exchange. Those firms hold ETF shares as a way to hedge their options trades, meaning the positions do not necessarily represent a bet that Bitcoin's price will rise.

“So in the end it was not outright buying,” he said.

His estimate draws on a review of Form 13F filings, which disclose certain securities holdings of investment managers. Thielen said the first wave of funds into the ETFs also included retail investors buying through institutions and corporate vehicles, some of which paid substantial premiums relative to the value of the underlying crypto holdings.

Even so, he believes larger players may still arrive. “I would still think the institutions could come. I would still think that some of the sovereign wealth funds could come,” Thielen said.

Thielen still sees Bitcoin at $90,000 by year-end

Thielen still sees Bitcoin reaching $90,000 by year-end, though he said a drop into the mid-to-high $70,000s could come first. Bitcoin has already traded in that range, falling to about $76,100 on Friday following Binance's $6.3 billion hack. BTC finished October down 7.3%, according to Coinglass.

Thielen compared the price recovery of recent months with early 2023, when Bitcoin rose from around $20,000 to roughly $30,000. He said the doubts surrounding this year's rebound feel familiar, as investors scan for the next price drop and entry point.

“I think everybody sort of missed it. So everybody wants to buy again,” he said.

Bitcoin's return to $90,000 may rest partly on how much further the Fed raises borrowing rates. The central bank increased its benchmark rate by a quarter of a percentage point in September, to a target range of 3.75%–4%, and held rates steady last Wednesday in a split vote, with two officials voting for another quarter-point increase. The Fed's statement said inflation was still elevated, leaving open the possibility of further increases.

Thielen expects another hike by December, followed by a more cautious approach to further increases that could help Bitcoin rally toward year-end. Whether that December hike materializes — and whether ETF flows shift from options hedging toward outright buying — are the markers to watch as his year-end scenario plays out.

Ethereum needs to show holders the money

Thielen expects Bitcoin to outperform Ether, arguing that too much of the value from Ethereum activity goes to layer-2 networks. Layer-2 networks execute transactions on separate ledgers and post only compressed records back to Ethereum, so most of the fees users pay stay on those secondary networks.

“I look at it more as like a valuable utility, but nobody wants to pay for it,” he said.

Making those networks cheaper to use has been a deliberate part of Ethereum's development, but cheaper transactions may muddy the investment pitch for ETH. Ethereum burns the base fees paid by users, removing those coins from circulation — a mechanism introduced through the network's 2021 EIP-1559 upgrade. Its supply shrinks when the amount burned exceeds the new ETH issued to validators, and it grows when issuance exceeds the amount burned, according to data from ultrasound.money. Lower fees can mean less ETH is destroyed.

Thielen, who said he has been bearish on Ether for more than a year, compared Ethereum with a highway.

“Everybody wants the highway to be empty so you can go fast, and the roads need to be super, super clean and fixed and everything, but nobody wants to pay for it,” he said.

He singled out Hyperliquid as an example of how trading activity can fund token purchases. The decentralized perpetuals exchange's assistance fund converts trading fees into HYPE, which is then burned. For Ethereum, Thielen wants a stronger connection between the network's use and the financial benefit to holders.

Source: Cointelegraph