|
So we turned to the best crypto expert we know: Jeffry Turnmire to shed some light on this seemingly counterintuitive situation.
Underlyings vs Derivatives
He told us that while this seems to make no sense, we have to remember that Bitcoin is the underlying asset.
And miners are a derivative of that.
This even happens with gold and gold miners — as well as other assets. So it’s not a completely unusual situation when you look at it from that perspective.
Ok simple enough, but why are they moving in concert? If they are all independent companies, shouldn’t at least some be moving up?
Mining But Not Holding
One force at play, he told us, is that while miners are essentially “digging up” the digital currency, not many miners are holding substantial amounts of Bitcoin.
So when the price of Bitcoin skyrockets, the value of those companies doesn’t rise as you would expect because they aren’t holding the very asset they extract from the digital dirt.
As a sort of counter-example, he mentioned MSTR which holds massive amounts of Bitcoin and has been skyrocketing lately along with BTC.
A Game Changer
He went on to remind us that earlier this year something happened that changed the game completely:
The SEC approved a slew of spot Bitcoin ETFs.
This allowed traders of all stripes to invest in Bitcoin directly — without the need for a separate account on a crypto exchange or a crypto wallet.
And when this happened, it changed the calculus for many investors:
Instead of having to use Bitcoin miners as “proxy” for playing Bitcoin, they could now invest directly in those spot ETFs.
This alone is sucking a lot of money out of the miners as it flows into spot ETFs.
But There’s Hope…
Jeffry quickly added that MARA, HUT, RIOT and CIFR (perhaps others) have bounced today.
MARA, in particular, seems to have found a solid bottom.
And it’s to the point where he’s done something he has recommended against previously: buying a short term (about 40 days) MARA call option a few strikes out of the money.
As he’s mentioned many times on his various YouTube shows, he’s been long MARA for quite a while — and continues to be very bullish on it for the long term.
That doesn’t mean all the miners will survive or even thrive. He’s mentioned that there are several factors unique to the company that caused him to back MARA.
We’ll have to fill you in on those details another time.
— The Prosperity Pub Team | | | | |
|
|
0 Response to "Bitcoin Booms… Miners Go Bust？"
Post a Comment