Meltem Demirors Explains What's Behind Bitcoin's Rally and What to Expect in 2024

Meltem Demirors, the Chief Strategy Officer at Coinshares, recently appeared on CNBC’s “Fast Money” to discuss the burgeoning optimism in the cryptocurrency market, particularly focusing on Bitcoin’s rally and the broader implications for digital assets as we approach 2024.

Demirors highlighted the significant recovery of Bitcoin, noting its surge to above $44,000 (which is the year’s high), a substantial increase from its position earlier in the year. This rally marks Bitcoin’s third consecutive week of gains.

She emphasized the resilience of the crypto market despite a challenging 2022, which saw numerous bankruptcies, fraud cases, and regulatory challenges, including the recent Binance ruling and CZ’s settlement with the SEC:

2022 was a bad year for us. Not a great look starting in June and going through the end of the year with FTX. A lot of bankruptcies, failures, and outright fraud … We just had the final shoedrop with Binance… Also, we saw an announcement that [Changpeng Zhao], the founder of Binance, settled with the SEC (US Securities and Exchange Commission)… As we look ahead, I’m calling this ‘the most hated rally.’ We’re going into the end of the year; everyone’s tired of hearing about crypto, but baby, we are so back.

Addressing the factors driving this rally, Demirors pointed to several key elements. She acknowledged the role of macroeconomic factors, suggesting that the potential shift in Federal Reserve policies and concerns over the US deficit could be influencing interest in digital assets. She also mentioned the reflexive nature of the Bitcoin market, where price movements tend to fuel further activity.

Demirors provided data to underscore the growing retail interest in Bitcoin. She cited Square’s (now Block) report showing significant Bitcoin trading volumes on its Cash App platform. Additionally, she noted the consistent inflows into crypto exchange-traded products (ETPs), with a 4% increase in global crypto ETP assets under management for the year.

Looking ahead, Demirors discussed the upcoming Bitcoin halving event, which will reduce the daily supply of mined Bitcoin by half, potentially impacting its price positively. She also expressed optimism about the approval of spot Bitcoin ETFs, estimating a 90% likelihood of this occurring.

While retail interest has surged, Demirors pointed out that major institutional investors have yet to make significant moves into the crypto space:

There are a lot of different factors that buyers are pricing in, but the big traders – the macro desks – they haven’t started buying yet… There’s still a lot of institutional investors waiting, and for me, the big leading indicator is when retail is back, and that’s when the dog coins start running.

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