Meltem Demirors, a long-time crypto bull, reiterated Tuesday her faith in the cryptocurrency, telling CNBC that she believes the correction is just weeding out investors with ‘paper fingers’.
The term paper hands is used by the crypto community to describe people who sell digital assets such as bitcoin during market turmoil. It is the opposite of the so-called “diamond hands”, or the believers who claim they will keep the bitcoins for the long-term.
“We experienced 200 days of market growth. It is impossible to have a number increase forever. This doesn’t happen on any market,” Demirors stated on “The Exchange.” “What we are seeing is a correction and contraction. A lot of what is happening is what we call the “paper hands,” the “weak hands.”
Chief strategy officer of digital asset investment firm CoinShares, Demirors, pointed out transaction activity on bitcoin blockchain to support her views.
“There are a lot of retailers that have entered the market, but didn’t do any research and are now selling.” She said that there aren’t many long-term holders who are selling. “If we look at the on-chain activity, wallets who have been holding for a while have actually been using this opportunity of accumulation.
CNBC’s Demirors comments follow a wild ride in bitcoin Tuesday. It began with a drop below the $30,000 support level, before rebounding back to positive territory later in the afternoon. After a series losses in May, analysts were watching the $30,000 mark.
Wall Street strategist Tom Lee told CNBC Tuesday morning that while the market value of bitcoin is currently at its lowest, he believes it will reach $100,000 by 2021.
Lee shared the belief with Demirors that a lot of recent selling is due to retail traders who bought bitcoin in early this year as the cryptocurrency was climbing higher towards its April high of $65,000.
Demirors stated that he believes there will be more consolidation in the future. “There is a lot more macro-uncertainty. There is a lot uncertainty surrounding policy. There are also many negative headlines.
China has been increasing its crackdown against cryptocurrency.
“I believe part of this is due to the crypto cycle that we go through every few years, but we are experiencing a lot more inflows. We are seeing a lot activity, especially on the market side,” Demirors stated.
Demirors stated that bitcoin has always been volatile. However, she explained that in the sharp pullback in May saw ‘a lot of leverage’ across the board. We’re done with deleveraging. We are now seeing a lot more cash being sold.