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OKEx Director of Financial Markets Lennix Lai Provides Insight on the Crypto Markets Post Bitcoin Halving at Consensus: Distributed
OKEx (www.okex.com), the world’s largest cryptocurrency spot and derivatives exchange, Director of Financial Markets Lennix Lai participated in a panel at Consensus: Distributed today to discuss risk catching and management after the halving. He shared his expert insight along with the CEO of FTX Samuel Bankman-Fried, and Deribit’s Business Development for Asia Lin Chen.
Moderated by Coindesk China’s Ariel Guo, the largest event in the crypto industry’s calendar looks very different this year. COVID-19 has shuttered the conference industry and moved all events online. Far from the packed auditoriums and top-tier entry prices, Consensus: Distributed is free for anyone to join and taking place as speakers participate from the confinements of their homes.
The panelists gave their views of the future price direction of BTC and how the halving will affect metrics like volume and trading. Judging by the short-lived bull run and pull-back before the halving, the FTX CEO commented that the price now appeared to have stabilized suggesting that miners are holding. He believed that BTC price was likely to remain within the $8-9K range for the foreseeable future.
The OKEx Director was in agreement, however, Lai added, “I think from the historical data standpoint it makes sense for people to view the halving as a bullish event in crypto. And fundamentally, it makes sense too because the halving is expected to decrease the future supply of bitcoin.”
He went on to say that in the lead-up to the halving, market sentiment was good, searches for ‘Bitcoin Halving’ on Google Trends were up ten-fold and OKEx had seen a strong basis on futures pre-halving, good volume overall, and a good influx of capital.
The Crypto Markets Post-Halving
Unlike Bankman-Fried, however, Lai expects to see some short-term sell pressure. “From a bigger point of view, the price of bitcoin is very likely to peak at halving so we shall expect to see a short-term downward pressure on bitcoin as well. I think fundamentally that might be a short-term sell pressure from smaller less efficient miners that have to quit the market. So, a drop of hashrate would also be expected after halving.”
He then added that he did not believe the price of Bitcoin would fall “too low” as new miners with improved equipment and efficiency would come online in the following months. Moreover, existing miners would also benefit from the cheaper electricity during the China flood season.
Chen agreed that there would be a large change in the mining landscape as many small miners with S9 models will be forced out of the market. That said, he pointed out that this had not happened yet as the hash rate is currently at a historical high. While we may see increased short-term volatility, the longer-term outlook is favorable.
Lai commented, “I think Bitcoin probably will be bullish and have a new all-time high in the next two years.”
Risk Management Strategies for Traders
When asked how miners, coin holders, and professional traders should manage their portfolios and carry out risk management, Lai replied that in times like these, the normal response would “buying at event – which is pre-halving, sell on news – which is post halving.” However, the big question remains as to whether the halving was already priced in. The sell-off indicates that, as a known event, this is likely.
“To trade on this,” Lai said, “I would suggest buying straddle to capture the short-term pump in volatility. I would also suggest to selling a cover call with your BTC holdings so as to generate some passive income during the short-term bearish market.”
That said, “In a longer-term perspective, I am still very bullish on bitcoin. The halving will fade out smaller miners and leave stronger miners, who tend to have less intention to sell their bitcoin inventory.”
The world’s largest and most diverse cryptocurrency marketplace, OKEx is where global crypto traders, miners, and institutional investors come to manage crypto assets, enhance investment opportunities, and hedge risks. We provide spot and derivatives trading, including futures, perpetual swap, and options, of major cryptocurrencies, offering investors great flexibility in formulating their strategies to maximize gains and mitigate risks.
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