Bitcoin (BTC-USD) slid back below $41,000 this week after advancing as much as 12% in December amid optimism that the SEC will approve its first spot bitcoin ETF early next year.

And the rally has room to run, according to Stronghold Digital Mining (SDIG) CEO Greg Beard, who expects “tens of billions of dollars of additional demand."

Beard added: "We're still in the early days of bitcoin adoption and so I'm quite bullish on what could happen to pricing when that manifests itself in the marketplace.'

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

Video Transcript

- Bitcoin bulls were enjoying a nice ride last week. As of last Friday, 2023 was Bitcoin's best year since 2020 in terms of percentage gains, but we did see a bit of a reversal. Bitcoin erasing its week long rally after one of the worst crypto selloffs that we've seen this year. So with all this volatility in the crypto market, where are prices headed next? We want to bring in Greg Beard. He's Stronghold Digital Mining's CEO. Greg, it's great to see you.

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So I think there's a lot of talk just about in terms of the pricing action that we've seen with Bitcoin, a number of headlines that have been driving some of this optimism as we look ahead to 2024. What do you think is the biggest driver of Bitcoin here over the next several months?

GREG BEARD: Yeah. Everyone's been paying attention to the prospect of ETFs being approved by the SEC and the prospective demand that will be brought to the Bitcoin market with those ETFs hitting the street, which if Bitcoin trades about $20 billion a day worth of coins in ETFs themselves, could be tens of billions of dollars of additional demand. So I think that's the reason for the recent run-up in Bitcoin in our view.

- Is the potential for ETF approvals even bigger than the halving that is set to come forward or anticipated next year?

GREG BEARD: Yeah. So there's a lot talk about what the halving would do. And the halving really just reduces the amount of the mining reward for the Bitcoin miners that approve transactions on the network. And looking backward, that has been a big impetus for Bitcoin price to rise.

But as Bitcoin has gotten bigger over time, the mining rewards are less important. So I think I might have the minority view that the halving will have a big immediate impact on price. I think it's a much bigger impact on the demand from protective of ETF acceptance or from broader market use and acceptance as Bitcoin becomes more prevalent.

- So Greg, when you talk about maybe broader use and acceptance, you talk about the fact that there is so much optimism surrounding the ETF approvals. How much of that optimism has already been priced in though when you take a look at the massive run-up that we have seen in Bitcoin?

GREG BEARD: Yeah. I think certainly, some will be priced in. But those ETFs actually have to go out and buy the bitcoins. And so I think the demand, the prospect for demand might be in the market a bit. But keep in mind, they actually have to go do it. And they can't do it until they're approved and created.