Bitcoin’s narrative is hard to pin down, but as with early internet stocks, real traction will come in time, cryptocurrency advocate Meltem Demirors told CNBC on Monday.
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“New technologies that shift the paradigm take a long time to really understand,” Demirors, who acts as chief strategy officer at digital asset manager CoinShares, said on CNBC’s “Fast Money.”
Despite bitcoin‘s aspiration to be a safe haven asset, the cryptcurrency has not seen a rally with the stumble of the Turkish lira, which hit a fresh all-time low against the dollar on Monday.
Except for a brief rally in July, bitcoin has been on a near-steady downward slide since briefly topping $19,000 in December. Even the announcement more than a week ago — that the Intercontinental Exchange would help create an open and regulated digital asset ecosystem — brought little movement in bitcoin’s price.
Despite that, crypto bulls hailed it as a step toward legitimizing the cryptocurrency. Bitcoin was last down about 0.6 percent at $6,277.
This might be an opportune time, but no one is viewing bitcoin as a store of value because the cryptocurrency is struggling with a narrative problem, Demirors said.
“The narrative around bitcoin is still really hard to grasp,” Demirors said. “Really the only metric we have for most cryptocurrencies is the price, and price is such an imperfect metric. What does actual utilization look like? That’s really the struggle for crypto right now.”
Demirors suggested institutional and retail investors should ignore the price and think of cryptocurrency in similar terms to an early internet stock, such as Amazon, Intel or Microsoft. Although successful now, it took years for those stocks to recover from initial highs after the dotcom bubble burst.
“What we saw in crypto was this massive run-up, where everyone got ‘FOMO,’ or fear of missing out, as we like to say. What it caused is a speculative bubble,” she said.
But now that the bitcoin bubble has burst, Demirors said capital is starting to get deployed into “building real businesses that serve a real purpose.”
Demirors said it isn’t clear when bitcoin might begin to regain value, or what that might look like, but progress will depend on determining which metrics are best for measuring cryptocurrency’s growth.
“We are starting to see real traction. A lot of it is really dependent on finding those data points, those metrics, that are going to drive that growth story,” she added.