What are your thoughts on starting a position here on the pullback?
Thanks!
Bitcoin miners are leveraged plays on bitcoin, and miners have recently been seeing some weakness as an upcoming event in April called the 'halving' will cut their revenue in half going forward. This is a headwind for bitcoin miners, but a tailwind for the price of bitcoin. As new supply that comes on to the market on a daily basis will then be halved, reducing supply pressure.
Miners are positioning for this by raising cash by issuing shares, purchasing more mining rigs to attempt to double their hashrate so as to offset any negative impacts from the halving, but in the near-term this will be a headwind. We feel that if one is looking for potential upside over and above the price of bitcoin, certain bitcoin miners can work well, however, we feel their price increases will lag behind bitcoin's in the near-term. If one is looking for leveraged bitcoin exposure and feels the price of bitcoin can continue to increase, we would be OK starting a position here while being mindful of its high volatility and position sizing.