Bitcoin Volatility Expected to Remain High
In a recent episode of Cointelegraph's Market Talks, Dan Rosen, associate director of derivatives at Luxor, a US-based Bitcoin mining pool, research hub, and service provider, shared his insights on the upcoming Bitcoin halving and its impact on BTC price. Rosen believes that Bitcoin's volatility will continue to remain in the double-digits for years to come. He compared the early volatility of Bitcoin to that of tech stocks in the 90s, such as Apple and Google, and expects that as the asset becomes more investable, its volatility will gradually decrease.
Hedging Risk with Hash Rate Derivatives
Traditionally, miners have had limited options for hedging risks within their operations. However, Luxor's hash rate derivatives provide a solution by allowing miners to hedge their exposure to changes in hash price. These derivatives enable miners to predict and lock in future revenue during periods of unexpected volatility, ensuring the efficiency of their operations.
The Impact of Macro on Bitcoin and Miners
Rosen discussed how macro factors could affect Bitcoin's price and miners. He noted that investors are realizing that the 2% inflation target rate might not be achieved anytime soon. As a result, the market is starting to price in higher inflation in the long term, which could hover around the 2.5% to 3% range. Additionally, the US dollar's status as a flight-to-safety asset is impacting equities and creating macro headwinds, leading to a depreciation of dollar-denominated assets.
Lower Bitcoin Prices and a Stronger Rally?
Despite the challenging economic outlook, Rosen believes that Bitcoin's price could experience new lows in the next six months due to these macro headwinds. However, he also expects a stronger rally to follow, indicating that the long-term outlook for Bitcoin remains positive.
Listen to the full episode of Market Talks on Cointelegraph Markets & Research YouTube channel for more insights into the future of BTC mining and the upcoming Bitcoin halving.
