Bitcoin (BTC-USD) surged past $42,000 following reports that the Securities and Exchange Commission (SEC) could approve a spot bitcoin ETF in January. The crypto rally comes even as crypto lending firm Nexo faced SEC fines, though Nexo Co-Founder Antoni Trenchev remains focused on building out crypto infrastructure.

Speaking to Yahoo Finance, Trenchev says the crypto market is sending "mixed signals" lately. Trenchev is optimistic in the long term as events in the crypto space, like Binance's settlement and hopefulness on a bitcoin ETF approval, illustrate different paths for regulation.

He states the crypto shakeout after FTX's collapse has weeded out "weak hands," allowing resilient assets like bitcoin to rebound. With momentum regaining in the digital asset, Trenchev sees a spot ETF as increasingly attractive. He even predicts Bitcoin could reach $100,000.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

AKIKO FUJITA: For more on the crypto sector, let's get to Antoni Trenchev, Nexo co-founder. Antoni, good to talk to you today. You certainly haven't been immune from the shakedown that has played out within the crypto sector. You had to take down a $45 million fine from the SEC. As you think about where crypto is today compared to pre-FTX collapse, pre what happened with Binance, how has that changed your strategy? How has that changed your thinking about how Nexo moves forward?

ANTONI TRENCHEV: Well, we have been very focused on building out the infrastructure. This is the great thing about bear markets, that you can refine your product, your infrastructure, whether it means technology or the legal aspects, licensing, and underpinning what underpins the enterprise. That's what have been very focused on this past few years and increasingly.

So after the FTX collapse, right now, I think we are in a sort of a situation where we have mixed signals. On the one side, we have all the positive things that have happened in the space, you know, the settlement that Binance has, the Bitcoin spot ETF that appears to be around the corner. And I'm certainly in the camp of believers. And then we have some messages from the Treasury from the SEC that they continue to be quite aggressive on crypto, and we have to see how it plays out. But ultimately, I'm very optimistic here.

RACHELLE AKUFFO: And actually, we have to talk about this rally that we've seen. How much of that is just about this hype around the spot Bitcoin ETF being approved versus looking further ahead to the Bitcoin halving event in 2024?

ANTONI TRENCHEV: Well, I think it's both. I think Bitcoin is sound fundamentally in the sense that we saw a deleveraging after the FTX collapse. We saw a shakeout of the weak hands, and Bitcoin has been transferred to stronger diamond hands, which now will hold on forever, that on the one side. And then just, like, structurally from a market perspective, we have everybody write Bitcoin off. It was like shows like yours all but stopped talking about Bitcoin for a few months.

And this also tells you a little bit about sentiment. And Bitcoin having this pre-programmed disinflationary mechanism that Bitcoin has and built in its code, I think it strikes a right note in this inflationary times. And you know, I think this, garnered with the Bitcoin spot ETF frenzy, is what is ultimately going to propel us from here, if we can hold the 42 level, which is very important, up to 50 in the short-term. Then there might be some correction and some profit taking and sell the news type of event. But then, until the end of year, I definitely could see it go up to 100k at the end of 2024.

AKIKO FUJITA: 100,000 by the end of the year, what's the catalyst?

ANTONI TRENCHEV: Well, the catalyst would be the Bitcoin halving. This is certainly what we saw in 2022 when it occurred around the mid of May. Some caution here for your viewers, who are about to go in long in crypto with the funds from the college tuitions for their children. Before that, we saw an intraday tank of 50% just prior to the halving, just a few months before that in 2022.

So crypto is not a one-way street, but I do see the Bitcoin ETF as an institutional draw, the draw of institutional money. And then the halving will be a huge event. And then if and when the Fed pivots from its very aggressive hiking cycle, and it plateaus out or even starts cutting rates, this will be the ultimate impetus for all risk-on assets, of which Bitcoin is the par excellence.