In the last two weeks, Bitcoin and the wider cryptocurrency market have experienced a minor rebound. Nevertheless, Crucible Capital General Partner Meltem Demirors maintained a cautious stance regarding the potential for a crypto upswing. During an interview on Bloomberg on March 25, Demirors discussed various topics, including trading volumes, ETF inflows, and worries about “hidden leverage” within the crypto realm.
“It’s a story of two cities. The mood is optimistic. There’s considerable excitement around the Trump administration’s policies,” she indicated, alluding to the renewed discussion regarding crypto in political dialogue. “However, when we examine the markets, volumes are dismal. We’re back to trading levels we observed prior to the election.”
Although media attention concerning pro-crypto signals from President Trump and World Liberty Financial has generated a wave of enthusiasm, Demirors underlined the importance of differentiating between hype and real market engagement. She pointed out that, up to now, the data indicate limited purchasing pressure, raising significant inquiries regarding where any sustainable interest in Bitcoin and other digital assets will arise.
When discussing the performance indicators for 2024, Demirors highlighted the significance of institutional ETF trading strategies in influencing demand: “We had ETF buyers. Reviewing the ETF buyers derived from 13F filings in December, most of these are firms engaging in basis trading, right? They’re not long-term investors. It’s not regular people going out and purchasing through their brokers.”
She elaborated that these firms frequently “purchase the ETF and subsequently short Bitcoin,” benefiting from price differences rather than seeking fundamental exposure. The dynamics surrounding MicroStrategy’s convertible arbitrage—where major institutional players utilize MicroStrategy’s publicly listed Bitcoin assets—further muddle market transactions. Demirors raised “increasing worries about a potential black swan if that trade unwinds.”
In recent trading sessions, certain altcoins have recorded brief surges that, at first glance, may suggest a revived interest among traders. Demirors was quick to provide context for these movements: “If we exclude Bitcoin and Ether, there’s been no alteration in the market capitalization of that extensive tail of crypto and no variation in trading volume; it has remained stagnant. Only the names are rotating. It’s a game of musical chairs.”
Market analysts have been abuzz regarding President Trump’s online remarks and enhanced connections between key financial entities—such as Cantor Fitzgerald and Tether—amid wider regulatory discussions in Washington. Demirors, however, posited that these occurrences are merely part of the cycle: “Is this adding value? We’re extracting liquidity from the crypto ecosystem and channeling it into the banking sector or into the wallets of the creators of these coins. So, does that add value to increasing volume in Bitcoin and the wider cryptocurrency complex? Not necessarily.”
Nonetheless, she reiterated her optimism regarding Bitcoin’s endurance, noting that Bitcoin dominance is hovering around 70%—a peak not seen in years.
However, she also raised concerns about concealed leverage within the system. From potential unwinding scenarios concerning MicroStrategy’s Bitcoin reserves to substantial distributions from Mt. Gox creditors and the defunct FTX platform, Demirors anticipates a potential surge of selling pressure: “We’re seeing Mt. Gox beginning to distribute coins. FTX is also distributing coins, so we have possible net sellers and distributions that may transition into net sellers. Where will the inflows originate from? Who else remains to purchase?”
The question of what could reverse the current trend remains unanswered, particularly in light of underwhelming volume data. “I’m a straightforward person,” Demirors remarked. “Every time I speak, I emphasize that it’s all about the flows.”
As of the last update, BTC was priced at $87,926.
