The bitcoin halving is one of the most important events that, in general, the crypto community always looks forward to. In view of the previous halvings that caused strong increases in the price of BTC and consequently of the entire crypto market, We have consulted whether, under the current context for bitcoin, we would have to wait for a new halving in a little less than a year, for the price of the cryptocurrency to increase.
He professor and doctor in Finance and researcher at the University of Seville, Ismael Santiagohas shared his point of view on this question with Cointelegraph en Español and firstly pointed out that currently, investors view cryptocurrencies as high-growth tech stocksor, and for the special case of Bitcoin, this is becoming a leading and leveraged indicator of what the market will do.
In other words, in the opinion of the professor from the University of Seville, if we analyze in greater detail the characteristics that Bitcoin enjoys, it can be safely stated that the price of BTC is highly influenced by interest rate expectations. “If interest rates are expected to stay high for a long time, it will cause the price of BTC to fall. And, if, on the contrary, it is expected that interest rates are going to start to go down and they are going to stay relatively low for quite some time, the price of BTC would tend to go up”explained Ismael, before mentioning that The rise of BTC, without having to wait for the halving of this main cryptocurrency, will depend on the current negative correlation between the bitcoin price and the evolution of the interest rates set by the FED.
In this sense, he highlights two reasons for generating this negative correlation:
According to him, the first reason is that Bitcoin acts for some investors as a monetary asset, and therefore should maintain a negative relationship with interest rates. “When I have hoarded money, I am also giving up investing that money in fixed-income assets that provide interest. Therefore, the higher the interest rates, the more “interest” I am giving up to have the money hoarded. In short, interest rates are the opportunity cost of hoarding money and having liquidity.he declared.
As for the second reason, it is that For other investors, Bitcoin is a monetary startup that can play a very determining role in the future of our economies. In other words, for these investors, BTC represents a high-growth technological value.
Based on this, Santiago stresses that it is important to remember that technology companies are considered very long-term and uncertain investments, and that, therefore, they maintain a negative relationship with interest rates. “Such technology companies do not provide high cash flows at the present time, but are expected to provide them in the future, as long as interest rates are low to facilitate the respective revaluation in the market”he commented.
In conclusion, for the professor, it will have to be seen over time, if Bitcoin ends up behaving as a leading indicator of the market that represents high-growth technological values (lowering its price), or as a monetary asset that enjoys a negative correlation. between its price and interest rates (causing a rise in cryptocurrency due to the drop in interest rates in the United States). “Time will give and take away reasons”he concluded.
Disclaimer: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information presented here should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
It may interest you:
Investments in crypto assets are not regulated. They may not be suitable for retail investors and the entire amount invested may be lost. The services or products offered are not directed or accessible to investors in Spain.
