Meltem Demirors, the chief strategy officer (CSO) of cryptocurrency investment firm CoinShares, is saying digital assets have done “exceptionally well” in 2021 even after retreating from their record highs.
Demirors says in a Yahoo Finance interview that one of the factors driving the crypto market correction is the expectation that, based on history, the bull run following the quadrennial Bitcoin (BTC) halving is over.
“What we see at the end of this year, in particular, is I think we have three factors.
Number one, crypto operates in cycles and certain narratives and one of the narratives is that we have these four-year cycles around the Bitcoin halving and we are reaching the end of one cycle.
So I think there’s a little bit of self-fulfilling prophecy here where people are looking for the same pattern to repeat.”
.@CoinSharesCo’s @Melt_Dem on three crypto factors: “We have these 4-year cycles around the bitcoin halving, and we’re reaching the end of one cycle… number two and number three are bitcoin has become highly financialized… so we’re seeing correlation with macro markets.” pic.twitter.com/rKovJnwRXc
— Yahoo Finance (@YahooFinance) December 20, 2021
The CoinShares CSO says that the growing correlation between cryptocurrencies and the legacy markets is resulting in jitters evident in the latter impacting the former.
“But I think number two and number three are: Bitcoin has become highly financialized, the overall crypto class is more financialized.
So we are seeing a correlation with macro markets and I think the uncertainty we are seeing in equities is also translating to crypto.”
Demirors also says that the crypto market correction could be driven by investors booking profits.
“I think the third piece is again related to gains.
A lot of funds and investors that have seen significant gains in their portfolios this year are likely looking to crystalize and lock in some of those gains, you know, get paid those performance fees.
And so I think we are seeing some selling into the strength of the end of the year as people look ahead and rebalance their book and rebalance their exposure going into the New Year.”
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