Expert analyst Ray Salmond spoke with Dan Rosen, the deputy director of derivatives at Luxor, a US-based Bitcoin (BTC) mining pool, research center, and service provider.
The Halving Effect on BTC!
Rosen’s view on how the upcoming Bitcoin halving will affect the BTC price revolves around the volatility of Bitcoin, which is expected to remain in double digits in the coming years, and miners’ operations in hash rate derivatives. Rosen stated the following:
Any mature asset goes through high volatility when first introduced to the market, and if you compare Bitcoin’s volatility with technology stocks from the early 90s like Apple and Google, its volatility was astronomical. Bitcoin also experienced insanely high volatility levels ranging from 70% to 100% four years ago. It has been decreasing over time, but as the asset becomes more investable and eventually with the launch of an ETF, we will continue to see this trend. One day, probably within four or five years, we will see an asset class with less than 20% annual volatility.
Historical Data on BTC!
Historically, miners had very few options to hedge their operations against price fluctuations outside of committing to the Bitcoin rewards they mined. Luxor’s hash rate derivatives provide the infrastructure to this aspect of the industry by enabling miners to hedge against changes in hash price. Derivatives offer miners the option to estimate and lock in future revenue during unexpected volatility events that affect their operational efficiency. Regarding the macro and its impact on Bitcoin’s price and miners, Rosen said:
The market is starting to realize that we may not achieve the 2% inflation target in the near term, and it appears that the market is starting to price in inflation ranging from 2.5% to 3% in the long run. At the same time, we still see the US dollar as a safe asset, and this affects stocks and also creates macro fluctuations, leading to a depreciation of dollar-denominated assets.
Despite this gloomy economic outlook, Rosen also stated:
Although the Bitcoin price may not reach six-digit figures before or immediately after the halving, I wouldn’t be surprised to see new lows in the next six months due to macro winds and then a stronger rally.
