Bitcoin (BTC) closed the year 2023 with an impressive surge of over 160%, fueled by a trio of significant narratives including the potential approval of the first spot Bitcoin ETF in the US, the block reward halving, and a Fed rate cut. Despite these clear rally triggers, Coinshares’ Chief Strategy Officer Meltem Demirors highlighted two lesser-discussed factors that have stoked the recent Bitcoin rallies.
Speaking to Bloomberg Television, Demirors pointed out that the rise in BTC since November 2023 was driven by two catalysts that few analysts had noticed. The first factor, according to her, was the influx of funds into publicly traded Bitcoin mining companies.
Demirors elaborated that these companies are not just mining Bitcoin; they are diversifying into areas like artificial intelligence (AI) and building data centers that serve a variety of high-performance computing operations. She believes that the narrative around AI and the rise in Bitcoin has led to a significant capital inflow into the sector.
The second factor contributing to Bitcoin’s rise, as per Demirors, is the unexpected surge of the Ordinals protocol, which has become increasingly significant in the network’s activity and has provided substantial revenue to miners.
She noted that the Bitcoin network is currently experiencing high activity levels, with the emergence of BTC tokens similar to Ethereum ERC-20 tokens and Bitcoin NFTs known as Ordinals. This high activity has led to the highest hashrate ever seen on the Bitcoin network and unprecedentedly high transaction fees, which have recently surpassed the block reward for miners, indicating promising future revenue streams.
These insights from Coinshares’ Chief Strategy Officer shed light on the complex factors contributing to Bitcoin’s robust performance and suggest a dynamic and evolving landscape for the world’s largest cryptocurrency.