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- Meltem Demirors said that there’s no catalyst for Bitcoin and crypto to recover under the current macro environment.
- She believes that reduced borrowing and stablecoin regulations will suck out liquidity in the market, leading to sell-side pressure.
We have been through a brutal bear market this year with Bitcoin (BTC) correcting over 70 percent from its all-time high in November 2021. However, market analysts believe the crypto market pain is far from over.
On Monday, July 11, during her interview with CNBC, CoinShares Chief Security Officer Meltem Demirors said crypto will correct further along with growth and tech stocks. Demiror’s comments came after Some Wall Street investors said that they expect BTC to correct up to $10,000. In her interview, the CoinShares CSO said:
For us at @CoinSharesCo the view is we are going to stay where we are for a while. There are no near term upside catalysts. We have yet to see #bitcoin in a #recession. Certainly expect more pain ahead for tech stocks, growth and also #crypto.
In her continued comment, Demirors added: “we don’t see any short-term price catalysts for #bitcoin or broader crypto markets, given current macro environment and risk-off sentiment across all growth/tech sectors. That’s not rocket science”.
"For us at @CoinSharesCo the view is we are going to stay where we are for a while. There are no near term upside catalysts. We have yet to see #bitcoin in a #recession," says @Melt_Dem. "Certainly expect more pain ahead for tech stocks, growth and also #crypto." pic.twitter.com/3dQ7ke9tA5
— Squawk Box (@SquawkCNBC) July 11, 2022
The global macros continue to exhibit major uncertainty keeping investors confused. On the other hand, the Fed has announced that it will proceed with aggressive interest rate hikes to control inflation. This can put more recessionary pressure on the global market.
Demirors further added that the current crypto market crash doesn’t paint a complete picture. She added:
After billions of capital has been evaporated overnight, liquidity out of the system, we have not seen the full impact of that because most of the companies in the industry are not publicly listed so we don’t get there transparency we ususaly see.
Demirors talks about crypto lenders and stablecoin regulation
The massive collapse of multiple crypto lenders over the last two months has gripped the crypto community in shock. This has further put the market under liquidity pressure.
CoinShares CSO Meltem Demirors further explains that the demand for borrowing has reduced significantly. This has resulted in major yield compression. Over the last months, several desks have downsized their lending books by 50 percent or more after losing hundreds of millions of dollars.
“HOWEVER, we are seeing large traditional market makers looking for borrow both cash and coins in size. There is a massive void following the scale back and wind down of several of the industry’s largest crypto native lenders,” added Demirors.
Furthermore, she adds that strong regulations in stablecoins will dramatically impact cash liquidity. Liquidity crunch and regulation of stablecoins will lead to a sharp drop in access to USD.
Commenting on the FUD surrounding stablecoins, Demirors said: “Tether FUD, as always, continues. USDC FUD is now starting too, which is indicative of where we are in the cycle we see tradfi funds contemplating a trade called “the widowmaker” which is short USDT via borrow at 10 – 12%”.
