On June 18, former CoinShares Chief Strategy Officer Meltem Demirors discussed the current state of the cryptocurrency market as we head into summer. Speaking with Sonali Basak on Bloomberg TV’s “Bloomberg Crypto,” Demirors provided a detailed analysis of recent trends, market performance, and future expectations for the crypto space. At the time of this interview, Bitcoin was trading at around $64,592.

Source: TradingView

Market Performance and Inflows

Basak highlighted that earlier this year, there was significant buying activity in the market, driven largely by the introduction of ETFs. This surge in buying raised questions about whether the market was at its peak and if those who invested then would see substantial gains in the long term. Addressing these concerns, she noted the incredible performance over the past two quarters, with record inflows into US-listed spot Bitcoin ETFs amounting to $16 billion in net inflows. The nine U.S. Bitcoin ETFs alone saw substantial participation, marking a strong performance.

Current Market Conditions

Despite the strong start to the year, Demirors described the current market environment as a “sideways summer.” This term reflects a period of stagnation following a significant rally and subsequent correction. She pointed out several factors contributing to this phase:

  1. Hawkish Federal Open Market Committee (FOMC): The FOMC’s recent stance has been hawkish, leading to cautious market sentiment.
  2. High Consumer Price Index (CPI): CPI readings have remained high, contributing to economic uncertainty.
  3. Expectations of Rate Cuts: Although expectations of rate cuts were being priced in, the market’s response has been muted.
  4. Low Volatility and Trading Volumes: Volatility in the market has decreased significantly, with trading volumes dropping from $22 billion last week to around $11 billion this week.

Uncertainty and Key Questions

Demirors emphasized the prevailing uncertainty in the market. CoinShares focuses on understanding the sources of market flows, which remains a critical question this summer. She says identifying the net new buyers, their origins, and their purchasing preferences is essential for navigating this uncertain period.

The Tale of Two Cities in Crypto

She described the current crypto landscape as “A Tale of Two Cities,” indicating a dichotomy within the market. On one hand, there are record inflows and significant institutional interest; on the other hand, there’s declining trading volume and low volatility.

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