In the latest episode of Cointelegraph’s “Market Talks”, host Ray Salmond interviewed Dan Rosen, the associate director of derivatives at Luxor, a Bitcoin mining pool, research hub, and service provider based in the United States. The discussion covered various topics including Rosen’s perspective on the impact of the upcoming Bitcoin halving on its price, the reasons behind Bitcoin’s long-term volatility, and how miners can hedge their operations using hash rate derivatives.
Rosen compared the volatility of Bitcoin to that of tech stocks like Apple and Google in the early 90s, stating that any maturing asset experiences high volatility during its early stages. Bitcoin itself has seen extreme levels of volatility ranging from 70% to 100% four years ago. However, as the asset becomes more investable and the potential launch of an exchange-traded fund (ETF) looms, Rosen predicts that Bitcoin’s volatility will gradually decrease. He envisions a future where Bitcoin becomes a 20% or even sub-20% annualized asset class within four or five years.
Traditionally, miners have had limited options for hedging risk within their operations, apart from pledging their mined Bitcoin rewards. Luxor’s hash rate derivatives introduce a new infrastructure to the industry, enabling miners to hedge their exposure to fluctuations in hash price. These derivatives empower miners to predict and lock in future revenue, especially during periods of unexpected volatility that might hinder their operational efficiency.
Speaking about the macroeconomic factors that could influence Bitcoin’s price and miners, Rosen observed that the market is realizing that the 2% inflation target will not be achieved in the near future. Instead, it is reflecting a long-term expectation of inflation hovering around 2.5% to 3%. Simultaneously, the US dollar is still considered a safe haven asset, leading to macroeconomic headwinds and a devaluation of dollar-denominated assets, including equities.
Despite this challenging economic outlook, Rosen remains optimistic. He believes that although Bitcoin’s price might not reach six figures leading up to or immediately after the halving, it is possible to witness new lows in the next six months due to macroeconomic factors. However, he anticipates a strong rally afterwards.
For a comprehensive understanding of the conversation between Ray Salmond and Dan Rosen, listeners can access the full episode of “Market Talks” on the Cointelegraph Markets & Research YouTube channel. By liking and subscribing to the channel, viewers can stay updated with the latest content.