Meltem Demirors, chief strategy officer (CSO) at cryptocurrency investment firm CoinShares, says digital assets have done "exceptionally well" in 2021 even after retreating from their all-time highs.
Demirors He says In a Yahoo Finance interview that one of the factors driving the crypto market correction is the expectation that, according to history, the bull run that followed the quadrennial halving of Bitcoin (BTC) is over.
“What we see at the end of this year, in particular, is that 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 a cycle.
So I think there's a bit of a 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 are reaching the end of a cycle ... number two and number three are that bitcoin has become highly financialized. .. so we are seeing a correlation with the macro markets. " pic.twitter.com/rKovJnwRXc
- Yahoo Finance (@YahooFinance) December 20, 2021
The CoinShares CSO says that the growing correlation between cryptocurrencies and legacy markets is resulting in obvious jitters in the latter affecting the former.
“But I think number two and number three are: Bitcoin has become highly financialized, the crypto class in general is more financialized.
So we are seeing a correlation with macro markets and I think the uncertainty that we are seeing in stocks is also being translated to cryptocurrencies. "
Demirors also says that the cryptocurrency market correction could be driven by investors booking profits.
“I think the third piece is again related to earnings.
Many funds and investors who have seen significant gains in their portfolios this year are likely looking to crystallize and secure some of those gains, you know, get paid those performance fees.
And so I think we're seeing some sales in the year-end fortress as people look to the future and rebalance their book and rebalance their exposure for the New Year. "
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