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The United States’ first spot Bitcoin ETF is expected to be approved this month, and with the block reward halving and the Fed’s interest rate cut, Bitcoin (BTC) closed the year 2023 with an increase of over 160%. Despite clear rally triggers, Meltem Demirors, the Chief Strategy Officer of digital asset management company Coinshares, stated that the recent rallies in the largest cryptocurrency were fueled by two factors that very few analysts have mentioned.
The First Trigger of the Bitcoin Rally: Public Mining Companies
Speaking to Bloomberg Television, Meltem Demirors said that the rise in BTC since November 2023 was driven by two catalysts that very few analysts saw coming. According to Demirors, the first factor was the inflows of funds into public Bitcoin mining companies.
Coinshares’ Chief Strategy Officer commented on this, “Firstly, there was a tremendous capital inflow into public Bitcoin mining companies, and Bitcoin miners are now not only mining Bitcoin. We have people like Core Weave, Hut 8, and others entering into large language models for artificial intelligence (AI).” She added:
They are running a group of GPUs (graphics processing units), building data centers that serve a wide variety of high-performance computing operations, and at the end of the day, Bitcoin is not the only ecosystem that requires mining. Chips also need to be used in data centers. Therefore, I think there was a significant capital inflow due to this AI narrative and the increase in Bitcoin.
The Rise of the Bitcoin Ordinals Protocol Boosted the Price
According to Demirors, the second factor that led to the rise of Bitcoin was the unexpected surge of the Ordinals protocol, which has become an increasingly significant part of the crypto king’s network activity and has brought in a large amount of revenue for miners:
The second big thing was reaching an all-time high in hashrate. There is currently very high activity on the Bitcoin network. We now have BTC tokens similar to Ethereum ERC-20 tokens. We have NFTs called Ordinals on Bitcoin. I’m using a lot of jargon here, but the activity on the Bitcoin network is quite high right now. Therefore, the highest hashrate of all time was reached in Bitcoin, and for the first time in the history of the Bitcoin network, excessively high transaction fees are being seen. For some time now, transaction fees have exceeded the block reward miners receive per block they mine, which is extremely promising in terms of future revenue streams.
