Crypto market correction is triggered by investors booking profits – CoinShares CSO

    27 Dec 2021

    The CoinShares CSO, Meltem Demirors, is saying digital assets have done “exceptionally well” in 2021, even after retreating from their record highs. He suggested that the crypto market correction is driven by investors booking profits.

    Meltem Demirors, the chief strategy officer (CSO) of cryptocurrency investment firm CoinShares, said 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,” he said. “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.”

    The CoinShares CSO noted that the growing correlation between cryptocurrencies and the legacy markets results 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,” Demirors added. “So we are seeing a correlation with macro markets, and I think the uncertainty we are seeing in equities is also translating to crypto.”

    Also, Demirors suggested that the crypto market correction could be driven by investors booking profits.

    “I think the third piece is again related to gains, the CoinShares CSO claimed. 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.”

    As reported before, venture capital funds in 2021 have poured over $30 billion into the crypto sector, which is more than the previous 10 years combined for the new blockchain technology. According to PitchBook Data, that’s almost four-fold the prior high of about $8 billion in 2018, the year following Bitcoin’s 1,300% surge.

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