Bitcoin is currently trading at $8,200, up 118% from $3,754 on January 1.
In a new interview with CNBC, Meltem Demirors, chief strategy officer at crypto investment products and research firm CoinShares, explains why she believes Bitcoin is experiencing the huge surge following a long crypto winter that saw Bitcoin plunge just five months ago to a low of $3,285 on December 16. Bitcoin is now back at levels not seen since July 2018.
Speaking with CNBC in New York about the mood and tone at blockchain and crypto industry conference Consensus, Demirors says,
“This year the narrative is Bitcoin, Bitcoin, Bitcoin. So it’s great to see a return to Bitcoin. And everyone’s feeling good. We’re seeing signs of life. And there’s a lot of confidence right now.”
“Last year we saw this crazy speculative bubble. I was on the show a few months ago, and we talked about the depths of the crypto crisis. I think a lot of people initially looked at Bitcoin and said, ‘Oh, it doesn’t scale. It’s not fast enough.’ Everyone tried to create new coins that had different features they felt Bitcoin didn’t have, and they learned it was really hard to do that.
What we saw in the meantime was many institutions who had spent the last two or three years of learning about Bitcoin started to understand it, and they started to actually build platforms and products that touch Bitcoin directly. It’s the largest [crypto] asset by market cap. It’s the asset people know best. It has the biggest brand name, and most importantly, the Bitcoin network is the most secure network, as evidenced this week by Microsoft which had been working with Ethereum for a long time, has decided to move all of its identity work onto the Bitcoin network instead of another implementation of a blockchain.”
Although Demirors is cautious about declaring direct relationships between events and circumstances with the rise of Bitcoin, she outlines three main themes that are likely catalysts for the recent price surge.
“Number one, there’s a lot of global macro unrest. There’s a lot of volatility in the market. Times have changed. This is not 2018. The end of 2018 was rough in capital markets. Now we’re seeing a lot of volatility in tech stocks. And so Bitcoin is starting to look maybe not so crazy to investors.
Second big theme: Privacy. Privacy, privacy, privacy – it’s everywhere. Big efforts on the Hill, especially with the new privacy regulation coming, the breakup of Facebook, potentially. People are talking about Apple anti-trust suits, so that’s another big theme.
And I would say the last one is what’s happening in private markets. We’ve seen a lot of tech IPOs that haven’t performed the way investors have expected. So again, the idea of a new asset class, the idea of Bitcoin connecting with legacy finance is really appealing to the class of investors looking for innovation and high growth.”
“So, the price of Bitcoin corresponds with in-flows into Bitcoin, and the more people who buy it and choose to hold it, the better it is for the price. So two big things: Square, which is the primary way that retail investors have accessed Bitcoin – let’s be honest, Bitcoin is very friendly to retail investors, not so friendly to institutions, that’s changing – they’ve seen a doubling, quarter over quarter, of the amount of Bitcoin bought on their platform, $65 million this last quarter. So more and more people are buying and holding Bitcoin.
We see it in our products. Through the crypto winter, even though the price went down, we didn’t lose many customers. We had mostly holders. So people want to hold.”