SBI Holdings, a major financial and banking giant in Japan, has formally announced the launch of SBI Mining Chip Co., Ltd., officially entering the bitcoin mining industry.
In recent months, the most dominant forces in the global bitcoin mining industry in the likes of Bitmain, Cannan, and Japanese internet conglomerate GMO have struggled to adjust to market conditions.
As the bitcoin bear market extended to a 15-month correction, despite the gradual increase in hash power, the demand for bitcoin mining due to the general decline in profitability of mining noticeably dropped.
All-Time Performance of the Crypto Market
The entrance of SBI Holdings into the mining market at this phase of the correction suggests that the company has confidence in the long-term growth of bitcoin and the cryptocurrency market.
TIMING OF SBI’S BITCOIN MINING BUSINESS IS ESSENTIAL
In the months to come, with semiconductors expert Adam Traidman as the head of its mining venture, SBI Holdings is set to establish a strategic partnership with a major U.S.-based semiconductor enterprise to develop and manufacture bitcoin mining chips.
The official announcement of SBI read:
The SBI Group strongly promote on a wide range of businesses based on the digital asset, including cryptocurrency exchange business and other blockchain related businesses. The Group has practiced its cryptocurrency mining business at overseas and has now decided to expand its business scope to the manufacturing of mining chip itself and development of mining systems, through SBIMC.
Since April 2017, within a two-year span, the hashrate of the Bitcoin network has increased from 4 exahash to 48.5 exahash, by more than 12 fold.
The exponential increase in the hashrate of the Bitcoin network indicates the rise in computing power that is used to protect the Bitcoin blockchain protocol, allowing the network to become more resilient against attacks.
All-Time Highrate Growth of Bitcoin
While the hashrate of the Bitcoin network dipped quite substantially in late 2018 due to the Bitcoin Cash and the Bitcoin SV hashrate war during which both camps concentrated computing power into the two networks to gain control over their respective blockchain networks, in a larger time frame, the hashrate of Bitcoin has risen by a big margin.
On a yearly basis, the hashrate of the Bitcoin network remains higher than where it was a year ago. In fact, since April 2018, the hashrate of the Bitcoin network as nearly doubled from 25 exahash to 48.5 exahash.
Despite the overall increase in the computing power supporting Bitcoin, it is risky to commit to the cryptocurrency mining sector during a period in which dominant players in the sector have started to struggle.
But, it can also be said that SBI Holdings may see an opportunity to evolve into a major company in the global cryptocurrency mining industry as competitors have started to demonstrate signs of fallout and decline.
GMO PULLED OUT
Japanese multi-billion dollar internet conglomerate GMO reportedly lost 1.3 billion yen in 2018 amidst one of the worst bear markets in the history of the cryptocurrency sector and announced that it would stop manufacturing mining chips.
GMO’s Mining Venture Performance
The GMO team wrote:
The profitability of the in-house mining business of GMO Internet Group decreased as the cryptocurrency price declined and our mining share did not increase as expected due to the rise of the global hash rate, which went beyond our initial assumption.
After taking into consideration changes in the current business environment, the Company expects that it is difficult to recover the carrying amounts of the in-house-mining-related business assets, and therefore, it has been decided to record an extraordinary loss.
SBI is likely well aware of the unsuccessful attempt of GMO to win over the cryptocurrency mining industry and for the corporation to enter the highly competitive market at this juncture shows the firm’s belief in the long-term performance of the industry.
By CCN: Not everyone is convinced that Bitcoin’s highly-touted “golden cross” is a bullish signal for the world’s largest cryptocurrency.
ALMOST 25% OF CRYPTO INVESTORS BELIEVE GOLDEN CROSS IS BEARISH FOR BITCOIN
According to a Twitter survey conducted by crypto bull Thomas Lee, 24% of Crypto Twitter inhabitants believe that the signal, which typically hints at a bull run ahead, is a trap and that it is time to unload some Bitcoin. A golden cross occurs when a 50-day moving average crosses the 200-day moving average from under on the daily chart.
Being a typically-bullish signal, it did not come as a surprise for the largest number of respondents to say it is a good time to buy. However, it was not by a convincing margin. Only 43% of the respondents said the golden cross was a green light to purchase in anticipation of a imminent Bitcoin price rally.
SURVEY: Bitcoin golden cross (50D crosses above 200D) today.
MAJORITY OF BTC, XRP, AND ETH TRADERS ARE NET-LONG
Despite the survey, the formation of Bitcoin’s first golden cross since October 2015 has been greeted with excitement. Based on precedent, a bull run could be in the works. After the last golden cross, the bull run lasted until early 2018.
Sentiment has also turned bullish, and this is supported by factors other than technical analysis. Data compiled by forex exchange firm DailyFX also revealed that 81% of retail traders are now net-long bitcoin.
With altcoins, the percentage of retail traders who are net-long is even higher. About 97.7% of retail traders are net-long Ripple (XRP) while 92.2% are net-long Litecoin. Around 92.1% are net-long Ethereum.
BITCOIN PRICE DEFENDS $5,350 – CONFIRMATION OF A BULLISH TREND?
EToro Senior Market Analyst Mati Greenspan opines that a bull run has been confirmed. This is based on the fact that Bitcoin has broken the $5,350 resistance level, turning it into a new support area:
“Some people will want to wait until today’s close for confirmation but in my mind, this box is ticked. Following the extraordinary surge on April 2nd, many people were looking for some sort of continuation and now that we’ve broken the interim resistance of $5,350 it seems we have one.”
In some quarters though, the formation of the golden cross has been greeted with skepticism. Even in Lee’s survey, 19% indicated that they had no faith in technical analysis, calling it “voodoo.”
As proof of the unreliability of using technical analysis to predict prices of tradeable assets, crypto trader @cryptorandyy pointed out that there had been another golden cross in July 2015, which ended with the Bitcoin price nosediving by nearly 50%.
All eyes may be on Bitcoin (BTC), but other crypto assets have seen their fair share of gains since the start of 2019, sparking calls that what is known as “altseason” is here. This would seemingly be the case. Binance Coin recently surpassed its all-time high, in a brutal bear market no less, as Litecoin has rallied by over 200% since December’s low. Cardano, Ethereum, Tezos, and Basic Attention Token are among other prominent cryptocurrencies that have also seen jaw-dropping gains in the past 90 days.
And as Fundstrat’s Tom Lee explains, one of the “pre-conditions” for historical altcoin rallies has recently come to life in the current cycle. This precursor, for those unaware, is a drop in the correlation between the crypto asset class at large and Bitcoin itself.
Per Lee’s chart (seen below), which cites data from Bloomberg, CoinMarketCap, and his own firm, a drop in the rolling 90-day correlation between the two subsets has preceded three altseasons — Mar 2016, early-2017, and late-2017/early-2018. An altseason, as defined by Fundstrat, is when a large percentage of altcoins in the “liquid universe” rally by over 200% in a short period of time.
1/ Since 2015, one of the “pre-conditions” for the start of alt-season is a drop in the correlation between Alts and $BTC
This drop in correlation has started recently (lower part of chart and scale is inverted)
Funnily enough, however, the (pre-)altseason might already be over. On Wednesday, Bitcoin dominance hit 54.4%, the highest this figure has read since mid-December, when BTC was in the midst of the capitulation to the low $3,000s. This resurgence in Bitcoin’s market share came as a result of BTC’s ability to outperform smaller digital assets over the past week. For instance, BTC has lost 1.5% in the past 24 hours, but XRP, EOS, Stellar Lumens (XLM), and Tezos (XTZ) have all lost more than 5% of their value in the same time frame. And analysts expect for Bitcoin to outperform in the near future.
Bitcoin May Soon Outperform
Inmortal Technique, an industry commentator and trader, recently suggested that Bitcoin’s market dominance has broken past a declining trendline, all while altcoins’ market dominance has remained trap under a key resistance, indicating that BTC currently has the upper hand.
Speaking to Forbes, Mati Greenspan, the crypto-friendly markets analyst at eToro, has also suggested that BTC could continue to outperform. He simply stated that “Altseason is over,” meaning that Bitcoin could soon see an influx of buying pressure from investors looking to liquidate their altcoin positions. Jeff Dorman, the chief investment officer of Arca, echoed this:
“If you look back to early April, when BTC rose 25% in a day, every other digital asset rose as well. But, since that day, BTC has remained well bid while every other asset has slowly begun to decline due to a rotation out of ‘altcoins’ and into BTC.”
And according to AskMeHowToShort, a well-followed yet controversial analyst, this rotation out of altcoins might just be “bullish for Bitcoin.”
Don’t be fooled, everybody – alts bleeding to death and money flowing out of the market is bullish for #Bitcoin.
By CCN: The office of New York Attorney General Letitia James has officially obtained a court order to request iFinex Inc, the operator of bitcoin exchange Bitfinex and Tether, to cease operations in New York.
The Attorney General’s office found that Bitfinex allegedly handed over $850 million in co-mingled client and corporate funds to Crypto Capital Corp, a company based in Panama.
Bitfinex is said to have never received the funds from the Panamanian firm, leading to the loss of more than $850 million.
The Attorney General’s office alleged Bitfinex granted itself access to Tether’s treasury and mismanaged $900 million of the stablecoin’s cash reserves to “hide” the loss of $850 million.
Attorney General James said:
“Our investigation has determined that the operators of the ‘Bitfinex’ trading platform, who also control the ‘Tether’ virtual currency, have engaged in a cover-up to hide the apparent loss of $850 million dollars of co-mingled client and corporate funds. New York state has led the way in requiring virtual currency businesses to operate according to the law. And we will continue to stand-up for investors and seek justice on their behalf when misled or cheated by any of these companies.”
HOW DID IT HAPPEN?
The core problem with Tether is that it does not issue public audits like strictly regulated stablecoins such as Gemini Dollar and Circle’s USDC. As a result, investors are unaware of what the potential “receivables” could be and the dealings of Tether.
A public audit would have forced Tether to disclose the alleged $900 million transactions initiated by Bitfinex had it been recorded on the financials of Tether Limited.
The filings explain how Bitfinex no longer has access to more than $850 million dollars of co-mingled client and corporate funds that it handed over, without any written contract or assurance, to a Panamanian entity called ‘Crypto Capital Corp.,’ a loss Bitfinex never disclosed to investors. In order to fill the gap, executives of Bitfinex and Tether engaged in a series of conflicted corporate transactions whereby Bitfinex gave itself access to up to $900 million of Tether’s cash reserves, which Tether for years repeatedly told investors fully backed the tether virtual currency ‘1-to-1,’ the document read.
LACK OF PUBLIC AUDITS HAS ALWAYS BEEN A PROBLEM FOR TETHER
Since its creation in 2014, for more than five years, Tether has been a subject to consistent criticism from both investors and experts in the cryptocurrency sector for its lack of public audits.
Last month, CCN spoke to iFinex, the company that oversees Tether, about its new Terms of Service which read that every USDT is backed by cash and other receivables, but not 100% in cash.
“Every tether is always 100% backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities (collectively, “reserves”),” the altered Terms of Service read.
Kasper Rasmussen, the director of marketing at iFinex, told CCN that Tether is still 100% backed even though it may include other assets.
“Tethers remain completely stable and 100% backed, so Tether’s reserves always equal or exceed the number of issued Tethers. The only change is that the composition of the assets that provide that backing includes a combination of cash, cash equivalents, and may also include other assets or receivables from loans issued by Tether,” Rasmussen said.
HOW DOES AFFECT BITCOIN?
Immediately after the release of the New York Attorney General’s report, the bitcoin price fell below $5,400, indicating a dip in the confidence of the crypto market.