No One Expected This Bitcoin Rally, Says Demirors

Coinshares Chief Strategy Officer Meltem Demirors talks about the year ahead for Bitcoin, cryptocurrencies and spot Bitcoin ETFs.

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And I’ve got to ask you something you know what is the risk here with the run up in Bitcoin in anticipation of this move Gary Gensler has not been known to be a friend to the crypto industry per se what is the risk of the industry being

Wrong there’s always a risk SN that’s that’s the reality um but if we look at some indicators one great indicator gbtc the grayscale Bitcoin Investment Trust it is the largest in terms of AUM of the Bitcoin trust listed in the US today has been trading at a discount historically

That discount has really started to converge in the last few weeks in close that’s one important indicator the second important indicator prediction markets how are people pricing uh We’ve see 90% certainty on approval and then the last piece is you know the SEC is a government agency they have to share uh

Records of who they’re meeting with what they’re doing in the last few weeks there’s been a lot of me meetings even over the holidays meetings of SEC staffers with some of the proposed issuers including Black Rock vanac and others to discuss specifics of these s on of these applications that have been

Filed so on all counts it looks like all the small technical issues that have emerged over the last few months they’re starting to be discussed resolved so all of those things in my view are leading to a lot of optimism I’ve been using this week as an opportunity to not talk

About Bitcoin because we talk about it so much I think and we got a lot of notes about this too from people viewing in about other areas in crypto and what would be the drivers of gains in things like salana or ethereum how do you feel

About it absolutely look we look at the crypto asset class as a whole at coin shares and there is a lot happening the story isn’t just Bitcoin and by the way there’s a lot of different ways to play Bitcoin you’ve got publicly listed exchange traded products micro strategy Michael sailor cannot stop buying

Bitcoin um it’s sort of become a def Bitcoin ETF micro strategy now owns 1% of Bitcoin circulation and then publicly listed miners if we look at Bitcoin miners who are now starting to also delve into the broader GPU compute space those have been on a crazy tear in Q4 I

Call it the most hated rally but then we’ve got salana salana started the year at around $7 after the FTX bankruptcy there were a lot of concerns throughout the year around salana liquidations from the FTX estate and some of the knock on effects there salana today trading at

$110 so if you are holding salana it’s a great year there’s been a tremendous amount of activity on the salana blockchain in the salana ecosystem and then you know what I’m going to go back to bitcoin you’re going to hate it but Bitcoin layer 2os the Stax ecosystem is

Really heating up which is bringing smart contracts to bitcoin ethereum while etherium hasn’t seen a lot of price activity this year and coincidentally not a lot of inflows either there um ethereum still has a lot of activity there’s a lot of development in terms of scaling ethereum bringing

Down those transaction fees which do get quite high at times when there’s a lot of demand for compute on the network so I think overall it’s been a really exciting Q4 a lot of people were sidelined were not expecting this rally which is why I love to call it the most

Hated rally we weren’t ready not hate it if you’re in it melum any idea what went on at uh did digal currency group the parent of grayscale for Barry silur to be stepping down look I I have no idea what’s happening behind the scenes um but I do

Think grayscale obviously they have 35 billion in assets under management um obviously largest holder of Bitcoin in the ETP space today I think there’s a lot of questions right now around the future for the gbtc product grayscale there’s been discussion of conversion converting the trust to an ETF structure

That will allow for redemptions as you recall historically the reason the product has traded it’s such a high premium and then such a high discount is because of the fact that there’s only creation No Redemption uh just this morning Kathy Wood right here on the air on this channel right was discussing

Some of her concerns on the tax implications of the potential conversion so to me the indication is probably you know they’re gearing up to start to shift into ETF mode um but looking at the tea leaves you know it’s always difficult to know what’s going on behind

The scenes and if I know anything about crypto it’s that I am always always surprised you could not make this up chat GPT could not write the timelines that we have in this industry this run up in miners is it similar to what happened in China when it sort of banned

The miners and then everyone unplugged and then there was this skyrocketing is that what people think is going to happen for at having time is that why we’re seeing this run run up I think the runup is driven by two things primarily uh number one there’s been a tremendous

Inflow of capital into publicly listed Bitcoin Miners and Bitcoin miners are no longer just mining Bitcoin exclusively we’ve got folks like cor weave hut eight um and others getting into large language models for AI right they’re running a bunch of gpus they’re building data centers that are serving a wide

Range of high performance compute and at the end of the day bitcoin’s not the only ecosystem right that requires uh mining that requires a chips that requires data centers so I think there’s just been a wide availability of capital because of this AI narrative and because

Of the run up in Bitcoin and then the second big thing um we’re hitting all-time highs in terms of hash rate there’s a lot of activity on top of Bitcoin they’re brc2 tokens similar to ethereum zc20 tokens we’ve got Bitcoin nfts which are called ordinals I’m

Throwing a lot of lingo out here but there’s been a ton of activity on bitcoin so we’re seeing all-time high hash rate on bitcoin lot of compute directed at it and fees for the first time in the history of the Bitcoin Network transaction fees are exceeding the block reward for Bitcoin miners

Which is hugely promising in terms of future revenue streams now you were talking about layer twos earlier I’m really curious about um how the Bitcoin network is evolving I mean how do you think about what is possible on the back of Bitcoin moving forward especially because you saw the lightning story

Really started to advance certain forms of payments earlier but now there are more options yeah I think the Bitcoin story is one that continues to evolve um I like to say I’m not a Bitcoin maximalist but I’m certainly a believer in Bitcoin it is the first cult I joined and so I

Still love it very much um I think the really interesting story that’s always existed around Bitcoin is oh bitcoin’s digital gold oh it doesn’t need to ever change it’s perfect as it is so on so forth at the end of the day it is all of this computing power that is directed at

Bitcoin and this very proof of work mechanism that Bitcoin has so often been criticized for because it is so computationally intensive that I think really makes Bitcoin a really ideal settlement Network for Global transactions and then I think the other aspect that’s really exciting to me is

With all of these AI agents out there AI Bots some people now even have ai girlfriends um we need a digital currency that can work for a agent to agent payments that can work in this world where we have more autonomous AI agents we have machine to machine

Payments and so for that I think um Bitcoin is a really optional medium but obviously Bitcoin layer one it’s you know slower transaction times very expensive transactions with all this demand for Block space that’s driving revenue for miners so there’s great opportunity right now a lot of

Innovation and trying to build on top of the security of Bitcoin but offer these different features in terms of scalability