Category Archives: Bitcoin
The Block Lawmaker in Paraguay says he will introduce bitcoin regulation law next week A bitcoin – The Block Crypto
A bitcoin-friendly lawmaker in Paraguay is set to introduce legislation focused on regulation next week.
Carlos Rejala, whose pro-bitcoin tweets have drawn attention in recent weeks, said he was working with Senator Fernando Silva Facetti to introduce the measure on July 14, or next Wednesday.
Rejala's past pronouncements had initially sparked speculation that he would push for Paraguay to follow in the footsteps of El Salvador that is, to create a law declaring bitcoin as a form of legal tender. However, he later clarified those remarks, telling Reuters that his bill was centered around regulation.
"We want the regulators and banks to also participate so that Paraguayans or foreigners can operate with these assets legally, because we know that illegal transactions exist here and in other countries," he told the outlet late last month."We want to be a crypto-friendly country."
On the question of taking a similar approach to El Salvador, Rejala was quoted as saying: "It is a bill of digital assets and it differs from that of El Salvador because they are taking it as legal currency and in Paraguay it will be impossible to do something like that."
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The Block Lawmaker in Paraguay says he will introduce bitcoin regulation law next week A bitcoin - The Block Crypto
How to Invest in Bitcoin ETFs – Yahoo Finance
Bitcoins
A Bitcoin exchange-traded fund (ETF) is a security that mimics the performance of the actual Bitcoin digital currency. The underlying asset in the case of a Bitcoin ETF is the digital Bitcoin currency. There are Bitcoin exchanges, which are just networks of computers, where Bitcoin and Bitcoin ETFs are traded. However, the Securities and Exchange Commission (SEC) has not approved a Bitcoin ETF for trading on U.S. exchanges. Consider working with a financial advisor before you decide to invest in cryptocurrencies.
How ETFs Work
An ETF is a basket of securities in which you can invest and diversify your portfolio. Lets say you would like exposure to the entire stock market. There are several market indexes that reflect the stock market. Perhaps the most well-known is the Standard and Poors 500 (S&P 500) market index. Very few investors would have the funds available to buy stock in all 500 companies. Instead, they can invest in an ETF that holds equity securities traded on the S&P 500. It tracks the price of the S&P 500. The ETF gives the investors exposure to the securities in the S&P 500 since that market index is the underlying asset.
ETFs are set up like mutual funds, although ETFs are usually cheaper. They have passive management and the management fees are lower. They are traded on the exchanges just like stock. More importantly, they give investors access to types of financial assets to which investors would usually not have access as well as some diversification.
How Bitcoin ETFs Work
Man touches a digital crytocurrency price board
Bitcoin ETFs work exactly the same as other ETFs, but Bitcoin is the underlying asset instead of stocks or bonds. Investing in a Bitcoin ETF gives you exposure to the Bitcoin market. By purchasing a Bitcoin ETF, you are indirectly investing in Bitcoin, but you hold a position in an investment portfolio without having to deal with the security and storage issues of holding the Bitcoin currency. If you invest in a Bitcoin ETF, your risk is lower but still very significant.
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Keep in mind that Bitcoin is subject to extreme price volatility. As a result, Bitcoin ETFs have more risk than many other ETFs because of the price volatility of the underlying asset.
The beauty of investing in a Bitcoin ETF instead of in the digital currency itself is that ETFs are investment vehicles that are subject to regulation, which makes them safer for private investors. Even though there is no Bitcoin ETF approved for trading on U.S. exchanges, speculators or investors can use the Canadian exchanges.
Recently, several Bitcoin EFTs have been approved in Canada. Bitcoin financial assets can also be traded on several exchanges in Europe. Some of those are exchange-traded notes. There is an over-the-counter Bitcoin Trust available for investors to invest in. Heres what you need to know about this type of security.
Pros and Cons of Bitcoin ETFs
There are several potential benefits of Bitcoin ETFs over Bitcoin digital currency:
Bitcoin ETFs are safer and easier for cryptocurrency investors to invest in. By contrast, buying Bitcoin currency raises the issues of security and storage.
Bitcoin is a new investment asset. Since it is not related to stocks or bonds or other traditional investment assets in any way, it does provide a degree of diversification to your portfolio although it also increases the risk. Bitcoin ETFs provide a little less risk.
If you invest in Bitcoin ETFs instead of the underlying digital currency, then you can trade through traditional exchanges. You wont have to deal with a cryptocurrency exchange.
If investors think the price of Bitcoin is going to go down, they can short-sell Bitcoin ETFs, but not Bitcoin currency outside an ETF.
While there are potential advantages to Bitcoin ETFs, there are several reasons to be cautious:
Bitcoin ETFs have management fees. The more shares you own of the ETF, the higher your management fees.
You cannot trade Bitcoin housed in an ETF for other cryptocurrencies.
ETFs may be inaccurate. Due primarily to price volatility, a Bitcoin ETF may not accurately track its market index.
Special Considerations for Investors
Woman checking her Bitcoin ETF
There are special considerations investors should make before investing in Bitcoin ETFs. The industry is rife with fraud. Unscrupulous individuals may try to sell you false Bitcoin. Keep in mind that your Bitcoin key is the same thing as your PIN for your debit or credit cards and that key is subject to theft. There are also computer glitches that might allow in hackers, malware or computer viruses. The cryptocurrency market has almost no uniform rules and regulations.
As Bitcoin ETFs are developed in various countries, governmental regulations that are imposed could devalue any cryptocurrency, including Bitcoin. The lack of regulation could cause a lack of liquidity in the market as well as a question about the legitimacy of Bitcoin and all cryptocurrencies.
The Bottom Line
Bitcoin ETFs are more convenient ways to invest in the currency than the underlying Bitcoin digital version. The SEC is being cautious before it approves Bitcoin ETFs for the U.S. due to the inherent riskiness of this new type of currency. Due to the lack of regulation in the cryptocurrency market and its Wild West reputation, the SEC fears manipulation and is concerned that one rogue investor could move the market.
Tips on Investing
Bitcoin and all cryptocurrencies are risky and not meant for beginning investors. If you think you might want to invest in Bitcoin EFTs, it would be best to talk with a financial advisor. Finding one doesnt have to be hard. If you use SmartAssets financial advisor matching tool, you can find a financial advisor to your liking. If youre ready, get started now.
It may be inevitable that Bitcoin ETFs come to U.S. exchanges. If you are interested in buying shares in an ETF, even if it is not a U.S. EFT, use SmartAssets asset allocation calculator to get an idea of how it would fit in your portfolio.
Photo credit: iStock.com/Nature, iStock.com/Funtap, iStock.com/DisobeyArt
The post How to Invest in Bitcoin ETFs appeared first on SmartAsset Blog.
China’s war on bitcoin just hit a new level with its …
Budrul Chukrut | LightRocket | Getty Images
China's central bank said Tuesday it had called for the shutdown of a company that "was suspected of providing software services for virtual currency transactions."
The statement, issued by the Beijing office of the People's Bank of China, also warned institutions not to provide other services related to virtual currency, including providing business premises or marketing.
Lashing out against digital currencies is nothing new for the authoritarian state.
In 2013, the country ordered third-party payment providers to stop using bitcoin. Chinese authorities put a stop to token sales in 2017 and pledged to continue to target crypto exchanges in 2019.
But typically, each time Beijing has lashed out at the crypto industry, the sting has worn off and the rules eventually softened.
This time, however, appears to be different.
In May, China banned financial institutions and payment companies from providing crypto-related services. In June, there were mass arrests in China of people suspected of using cryptocurrencies in nefarious ways. That same month, regulators dialed up the pressure on banks and payment businesses to stop providing cryptocurrency services, and Weibo, the Twitter of China, suspended crypto-related accounts.
As of July, half the world's bitcoin miners have now gone dark following Beijing's call for a severe crackdown on bitcoin mining and trading.
"China's government is doing everything they can to ensure that bitcoin and other cryptocurrencies disappear from the Chinese financial systems and economy," said Fred Thiel, CEO of Marathon Digital Holdings and a member of the Bitcoin Mining Council.
So why China has essentially declared war on cryptocurrencies in 2021?
"We're all wondering," said Nic Carter, founding partner at Castle Island Ventures.
One theory is that it's part of a broader law-and-order push ahead of the 100th anniversary of the Chinese Communist Party this year.
"They're cracking down on all sorts of undesirable behavior," Carter said.
Crypto has long been synonymous with crime on the mainland.
"The largest-ever Ponzi in crypto was likely Plus Token, which was a Chinese project," he said.
In that scheme, scammers swindled $5.7 billion from investors and dozens were arrested. "That will be lingering in their memory,."
Another theory is that China is clearing the runway for its very own digital yuan, a central bank digital currency that's been in development since 2014.
"Part of this is to ensure the adoption of China's central bank digital currency, and part of this is most probably to ensure financial surveillance activities are able to see all economic activity," Thiel said. The digital yuan could, theoretically, enable the government greater power to track spending in real time.
But Carter contends that bitcoin and the digital yuan are different to the point that they can't really be considered direct competitors.
"That's certainly the most commonly cited reason," Carter said. "I just don't know if I believe it. They're such distinct systems from each other."
The most likely motivator, according to Carter, is that Beijing is looking to stem capital outflows via stablecoins and cryptocurrencies. "China choking off the flow of yuan to crypto is a big deal," he said.
When it comes to the price of bitcoin, stemming all Chinese retail into crypto "totally moves the needle," according to Carter.
"I think that actually explains a lot of the market weakness and the sell-off," he said. "The good news is that as the crackdown has accelerated, bitcoin has stayed pretty flat, which suggests the market has digested this information."
Thiel believes that prohibiting bitcoin and crypto will actually help bitcoin in the long term.
"If China's goal was to kill bitcoin by shutting down 50% of the mining capacity and prohibiting trading thus crashing its value to punish Chinese holders (a la Didi post IPO and Ant Financial)," it didn't work.
"Instead, bitcoin proved its resiliency and the trades just moved offshore and miners elsewhere will take up the slack."
Alyse Killeen, founder and managing partner of bitcoin-focused venture firm Stillmark, points out that this whole conversation may be a moot point, as a government's capacity to effect a bitcoin ban will only continue to erode over time.
"I'd expect this type of news to have less of an impact on bitcoin's exchange rate than it has historically," she said. "It's also true that there has been some level of industry inoculation to this news bitcoin has been banned many times in many geographies, and yet today adoption is outpacing internet adoption at a similar lifecycle stage."
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China's war on bitcoin just hit a new level with its ...
Bitcoin, ether, dogecoin cracked nearly 10% today. Here is why – Mint
Major cryptocurrencies slumped on Friday with bitcoin, ether and dogecoin falling up to 10% amid continued consolidation and low volatility, as bulls and bears continued to fight for domination over the crypto market.
The crypto market mirrored the weak trend in the traditional markets, where major global equity indices traded in the red on concerns over the US growth outlook amid fears of the rise in covid-19 cases due to the delta variant.
While bitcoins correlation with S&P 500 hit a three-year low in June, as per the Kraken Intelligence report, experts say that institutional adoption of cryptocurrencies over the past year has made them susceptible to changes in the traditional markets.
Over the past two months, bitcoin has been trading between $30,000 and $42,000 levels as sentiment remained muted amid concerns over the environmental impact of bitcoin mining and regulatory crackdown in China.
The worlds biggest cryptocurrency on Thursday again slumped below the crucial support at $33,000 level and is now in danger of falling towards the $30,000 level. The digital asset, which is 50% lower against its all-time high, was trading 6% lower at $32,682 at around 4pm, as per CoinGecko.com.
Trading veteran, Peter Brandt on Wednesday said that bitcoin may soon fall below the $30,000 level.
In a Twitter thread, Brandt, who is the chief executive officer of global trading firm Factor LLC, shared a chart pattern showing bitcoins trading range. He also launched a poll asking users how low bitcoin can go below $30,000. However, most respondents were of the view that the digital currency wont break that level.
However, a major critic of bitcoin, Peter Schiff, who is the CEO of US-based Euro Pacific Capital, tweets that the digital asset may lose over a third of its value from here on.
Bitcoin continues to carve out the right shoulder of an ominous head and shoulders top pattern. If bitcoin takes out the June low, the market could easily collapse below $10,000, especially if leveraged speculators are forced to sell. No one seems to acknowledge this possibility," Schiff tweeted. Bitcoin had slumped to $28,000 level last month.
Meanwhile, the worlds second-biggest cryptocurrency, ether, was down over 8% at $2,183 today, while Shiba Inu-based meme crypto dogecoin slumped as much as 10%.
The sentiment in the crypto market further took a hit after shorts on cryptocurrency exchange Bitfinex spiked 160%. The latest price action came hours after fresh selling pressure thanks in part to an unknown whale trying to short it with over 5,000 bitcoin," Cointelegraph reported.
In the bearish cues from global regulators, The European Union is expected to propose a new agency to crack down on money laundering and transparency rules crypto assets, while Chinas central bank highlighted concerns over risks to financial systems from stablecoins.
A stablecoin is a digital currency that is linked to an underlying asset such as a national currency such as the US dollar or a precious metal such as gold.
Last week, Fitch Rating Ltd had said that the rapid growth of stablecoin issuance could have implications for the functioning of short-term credit markets.
In another negative news for the crypto market, the Securities and Exchange Commission (SEC) on Wednesday extended its review of SkyBridge Capitals application for a bitcoin exchange-traded fund.
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Bitcoin, ether, dogecoin cracked nearly 10% today. Here is why - Mint
Bitcoins Mid-$30,000 Struggle And $2.87 Billion Crypto Whale Spike – Forbes
Following a fresh wave of regulatory crackdown on cryptocurrency mining operations in China, bitcoin saw a historic difficulty readjustment of nearly 28% last Saturday. The bitcoin network automatically adjusts the level of difficulty it takes to find a new block approximately every two weeks, or 2016 blocks, based on the amount of computing power on the network, so that new blocks are added on average every 10 minutes. In the near term, the remaining miners, especially those outside of China, stand to collect larger profits, however the market shows signs of stagnation.
Bitcoin is struggling to break out of the $34,000-range, trading at $34,618 as of 6:50 a.m. ET. According to data from Coinbase, bitcoins price has been range-bound between $33,197 and $35,909 over the last five days, with a five-day change of +2.4%.
Bitcoin price chart according to Coinbase
Bitcoin is in a consolidation phase between $30,000-$42,000 zone andwe expect it to spend the next few weeks testing this range on either side, wrote Pankaj Balani, CEO of crypto derivatives platform Delta Exchange, in a message to Forbes. There are limited catalysts here for any break on the upside in the short term; on the downside however weakness in the economic data is a concern. Any weakness in the broader markets or reduction in liquiditycan cause sharp down-moves in bitcoin. We see this reflected this in options data as well with puts trading at a premium to calls for July and August expiry.
These observations dovetail with an overall tempering of the market after a volatile few weeks. The short-term volatility is now at 2-months low, reports Norwegian crypto analytics firm Arcane Research.
BTC-USD Volatility
Crypto Whales Remain Hungry
As analysts are looking for clearer signs in the broader market amidst this relative tranquility, crypto whales (individuals or entities with large amounts of crypto holdings) are ostensibly buying. On July 2, 18 new whales surfaced on the chain and the total bitcoin balance held by whale entities shot up by 82,760 BTC, or $2.87 billion at current prices, according to on-chain analyst Will Clemente. The spike leads me to believe we may finally start to see some new big buyers step in (a bullish sign), writes Clemente.
Additionally, a new survey by Nickel Digital Asset Management, $200 million U.K. crypto hedge fund, found that 82% of institutional investors and wealth managers from the U.S., U.K., France, Germany, and the U.A.E. who currently have exposure to cryptocurrencies and digital assets expect to increase their crypto holdings by 2023.
That said, not all are convinced that we are out of the bearish woods. Ben Lilly, a crypto economist at trading and analytics platform Jarvis Labs writes, While we wouldnt be entirely surprised to see the price run higher, we are leaning towards downside movements in the near term. Which means even if price does pop higher, we expect price will lack momentum and ultimately retest $32-30,000 support.
Meanwhile, other top cryptocurrencies including Ethereum, BNB, Cardano and Polkadot are up on the week by 4.2%, 9.2%, 2.8% and 2.1% respectively.
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Bitcoins Mid-$30,000 Struggle And $2.87 Billion Crypto Whale Spike - Forbes
Bitcoin billionaire Mircea Popescu dies, leaving lost fortune
Controversial Bitcoin billionaire Mircea Popescu, 41, has suddenly died, leaving behind a massive crypto fortune that could be worth as much as $2 billion and which some speculate could be lost forever.
Popescu, known to be among the largest individual holders of Bitcoin in the world at one point, drowned last week off the coast of Costa Rica near Playa Hermosa after going for a morning swim, according to local news reports.
Popescu was reportedly swept away by the current and died on the spot.
His death has since been confirmed by three women who were reportedly known to be close to him, though others have raised questions over whether hes actually dead.
His website, which he previously actively maintained, has not been updated since June 23, the day of his reported death.
Popescu, a controversial figure with documented instances of sexism and bigotry, according to Nasdaq.com, was estimated to hold at least tens of thousands of Bitcoins, with some estimating even larger holdings.
The lower end of those estimates would place the value of Popescus ownership close to $2 billion, based on the peak value of Bitcoin reached in April. Based on Bitcoins current value, his holdings would have been worth closer to $1 billion.
It remains unclear who, if anyone, has access to his digital assets, and crypto watchers are already speculating that the fortune could be gone.
Alexander Marder, a research analyst for Crypto Briefing, said on Twitter that Popescus Bitcoins may be lost forever, along with those of John McAfee, the antivirus software pioneer who hanged himself in a Spanish jail cell last week.
Anthony Pompliano, founder of Pomp Investments and noted Bitcoin bull, said in a since-deleted tweet that the loss of Popescus holdings could benefit other current holders of the crypto.
Mircea Popescu, a Bitcoin OG, has passed away. He likely owned quite a bit of bitcoin, Pompliano said on June 27 in the since-deleted tweet. We may never know how much or if they are lost forever, but reminds me [of what] Satoshi said: Lost coins only make everyone elses coins worth slightly more. Think of it as a donation to everyone.'
Pompliano appeared to be referencing a quote attributed to Satoshi Nakamoto, the pseudonym used by the anonymous person or people who developed Bitcoin.
Others in the crypto space mourned the loss of Popescu, who was known as a Bitcoin pioneer and early adopter.
Pete Rizzo, editor of Bitcoin Magazine, noted Popescu was known as The Father of Bitcoin Toxicity by some.
Popescus most high-profile crypto venture was likely MPex, a self-styled Bitcoin securities exchange, which he launched in 2012, long before Bitcoin received its current-day popularity.
The Securities and Exchange Commission investigated MPex in 2014, according to emails released by Popescu himself.
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Bitcoin billionaire Mircea Popescu dies, leaving lost fortune
Are Bitcoin Prices Getting Ready To Break Free Of Their Current Malaise? – Forbes
Bitcoin's Bollinger bandwidth reached a mulit-month low today. Does this signal impending ... [+] volatility? (Photo Illustration by Chesnot/Getty Images)
Bitcoin prices have been trading in a reasonably well-defined range lately, but could a multi-month low in the value of technical indicator presage a coming breakout?
The worlds most prominent cryptocurrency has been moving largely between $30,000 and $42,000 since late May, according to CoinDesk.
Earlier today, CoinDesk reporter Omkar Godbole wrote about the digital assets market conditions, emphasizing one specific technical indicator:
Bollinger bandwidth, a measure of volatility calculated by dividing the spread between the Bollinger bands by the 20-day average of the cryptocurrency's price, has declined to a 2 1/2-month low of 0.15, he stated.
Similarly low readings of this indicator came before significant increases in volatility, noted Godbole.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
Bollinger Bandwidth Considerations
However, a low Bollinger bandwidth does not, in and of itself, signal an impending breakout, analysts pointed out.
Bollinger Bands illustrate market volatility and a narrowing of the Bollinger bandwidth is a way of visualizing the decrease in volatility in recent weeks, said David Keller, chief market strategist at StockCharts.com.
In general, periods of lower volatility usually precede price breakouts. We saw that with Bitcoin and narrow Bollinger Bands in October 2020 and December 2020 before large price increases, and we also saw that in April 2021 right around the top for Bitcoin.
William Noble, the chief technical analyst of research platform Token Metrics, also commented on the situation.
Bollinger Band width is a good gauge as to [how] long, or how painful, a range trade has become. With bitcoin BBW crashing to .15 you have a numerical manifestation of the boredom bitcoin traders are living with.
BBW can sometimes crash and stay at low levels for up to a month, he added.
Low BBW doesnt guarantee the range will end soon.
Consulting Additional Indicators
When looking at Bollinger bandwidth, market observers can benefit significantly from checking other technical indicators, said Noble.
When using Bollinger Bands, you want to look for a reversal candlestick, he stated.
If bears try and force the market down, but bulls make a dramatic counterattack that same day, that is the sign that bulls have control and the range could end.
The same goes for the downside, Noble added.
For example, if bitcoin is in a tight range and there is a sudden breakdown because of a problem in the stock market, the sudden shock of the down move can send bulls running for cover.
Katie Stockton, the founder and managing partner of Fairlead Strategies, LLC, also weighed in, stating that:
I would always cross-reference any tool with other indicators.
She noted that when Bollinger bands contract, its time to watch levels closely.
So, Id be watching the 50-day MA and 30K for a breakout/breakdown, with a breakout more likely (in my work) from an overbought/oversold perspective.
Stockton wasnt the only one who spoke to potential downside, as Keller also offered some input on the bearish price action the digital asset might experience in the near future.
Overall, the chart of Bitcoin remains in distribution mode, with lower highs and lower momentum through much of 2021, he stated.
Bitcoin has remained below a downward-sloping 50-day moving average since May, indicating overall price weakness. The tight Bollinger Bands suggests a breakout is imminent, and the patterns of distribution suggest that break will most likely be lower.
Look for $30,000 to remain an important area of support, and a break below $30,000 could open the way to the next downside objective around $27,000, Keller emphasized.
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether and EOS.
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Are Bitcoin Prices Getting Ready To Break Free Of Their Current Malaise? - Forbes
This Is The Key Level To Reignite The Bitcoin Rally – Forbes
The Bitcoin price has shown low volatility lately. Its price is trading in a tight range, under $36,000. While the dominant cryptocurrency is much higher than where it was this time last year, it is down more than 40% since its peak in April.
Bitcoin price continues to range in a small range, unable to find a clear direction.
The key level the Bitcoin price has to over come is $38,000. Above it, the rally would likely get reignited, especially at a point where the futures market is not crowded.
Many traders in the cryptocurrency space are looking at the daily chart of the Bitcoin price.
If the Bitcoin price exceeds $38,000, it would break out of a crucial technical formation, as seen below in a chart shared by the pseudonymous trader TeddyCleps.
The Bitcoin price daily chart.
But, the problem is that Bitcoin is continuously trading in a small range, unable to either break upwards or correct downwards.
How Would Bitcoin Break Above $38k?
There are two factors that could push Bitcoin upwards, above $38,000.
The first is the miner capitulation bottom signal. Recently, the Bitcoin hash rate has plummeted due to Chinas growing pressure on the local mining sector.
Historically, whenever the hash rate dropped hard, it marked a bottom, as it made many miners capitulate.
The second is the consistent selling pressure coming from the futures market.
Across major exchanges, the futures funding rate of Bitcoin has frequently been negative in recent weeks.
This means that many traders in the crypto derivatives market are shorting or selling Bitcoin, instead of buying.
When the selling pressure becomes too intense, it opens up the possibility of a short squeeze.
In the Bitcoin futures market, a mechanism called funding rate exists. Exchanges use this mechanism to reward the minority in the market.
For example, if there are more buyers in the market, the futures funding rate would typically hover above 0.01%. This means that buyers have to reward sellers 0.01% of their position every eight hours, and vice versa.
In recent weeks, the Bitcoin futures funding rate on major exchanges has been hovering at around -0.01%.
Since this kind of market incentivizes buyers, it could increase the probability of a short squeeze, especially when met with a strong fundamental catalyst.
Still, there are concerns shown by economists and analysts toward the crypto market. Namely, the negativity around stablecoins and the mining sector persist within the media circles.
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This Is The Key Level To Reignite The Bitcoin Rally - Forbes
Bitcoin prices have crashed, but CoinBase stock may still double: analyst – Yahoo Finance
It's time to back up the truck and buy the beat-up shares of pioneering crypto exchange Coinbase (COIN), contends Oppenheimer analyst Owen Lau.
Coinbase shares don't deserve to be swept up into the latest crypto winter, according to Lau.
"We think Coinbase should not trade in lockstep with bitcoin because bitcoin can be very volatile, but at the same time because of their volatility it drives higher trading volume. It is similar to all the traditional exchanges, and we think that it's still a misunderstanding in the market that people think Coinbase should trade along with bitcoin going forward," Lau said on Yahoo Finance Live moments after releasing a bullish research note on the company.
Lau reiterated his Outperform rating on Coinbase along with a 12-18 month price target of $440. In effect, Lau is looking for Coinbase shares to nearly double within an 18 month timespan.
Here are key aspects to Lau's call:
Stronger than expected second quarter volumes.
Wall Street analysts will likely be forced to raise their 2021 estimates in light of a strong second quarter for volumes.
Concerns of Coinbase cutting its fees are overblown and will subside.
That being said, Coinbase shares have been swept up into the downdraft in crypto prices going on for months already.
From the record highs of more than $63,000 in mid-April, bitcoin (BTC-USD) has shed about 50% (including a trip below the $30,000 level). Major sell-offs have spread to other top cryptos such as dogecoin and ethereum amid fears of regulator crackdowns in the U.S. and China.
Coinbase shares are down about 30% over the past three months. At $234.88, Coinbase shares trade well below the $328.88 level set on its Nasdaq debut in mid-April.
Coinbase employee Daniel Huynh holds a celebratory bottle of champagne as he photographs outside the Nasdaq MarketSite, in New York's Times Square, Wednesday, April 14, 2021. Wall Street will be focused on Coinbase Wednesday with the digital currency exchange becoming a publicly traded company. (AP Photo/Richard Drew)
The pullback comes despite Coinbase CFO Alesia Haas reiterating in an interview on Yahoo Finance Live that the second quarter started off strong.
Said Lau in his note, "Looking ahead, we believe management will continue to strategically increase contributions from 1) recurring revenue (e.g., the Coinbase Earn campaign, staking, and M&A) and 2) altcoins. Coinbase indicated ~40% of its trading volume in 1Q came from altcoins, materially lower than peers (e.g., ~85% of spread revenue for Voyager). After adding Dogecoin, Polkadot, and others, Coinbase should gradually reduce its reliance on Bitcoin. We continue to see a sharp dislocation between Coinbase's fundamentals and its valuation and believe the current price offers an attractive entry point for long-term investors."
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Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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Bitcoin prices have crashed, but CoinBase stock may still double: analyst - Yahoo Finance
Bitcoin mining is now easier and more profitable as algorithm adjusts after China crackdown – CNBC
A bitcoin mine near Kongyuxiang, Sichuan, China on August 12, 2016.
Paul Ratje | The Washington Post | Getty Images
It just became a whole lot easier and much more profitable to mine for bitcoin.
The world has known for months that more than half the world's bitcoin miners would be going dark as China cracked down on mining. Now that it's happened, the bitcoin algorithm has adjusted accordingly to make sure miner productivity doesn't continue to fall off a cliff.
That adjustment which took effect early Saturday morning also means that way more cash is going to the bitcoin miners who remain online.
"This will be a revenue party for miners," said bitcoin mining engineer Brandon Arvanaghi.
"They suddenly own a meaningfully larger piece of the pie, meaning they earn more bitcoin every day."
A bitcoin miner runs a program on a computer to try to solve a puzzle before anyone else does. Solving that puzzle is what completes a block, a process that both creates new bitcoin and updates the digital ledger keeping track of all bitcoin transactions.
China had long been the epicenter of bitcoin miners, with past estimates indicating that 65% to 75% of the world's bitcoin mining happened there, but a government-led crackdown has effectively banished the country's crypto miners.
"For the first time in the bitcoin network's history, we have a complete shutdown of mining in a targeted geographic region that affected more than 50% of the network," said Darin Feinstein, founder of Blockcap and Core Scientific.
More than 50% of the hashrate the collective computing power of miners worldwide has dropped off the network since its market peak in May.
Fewer people mining means that fewer blocks are solved each day. Typically, it takes about 10 minutes to complete a block, but Feinstein told CNBC the bitcoin network has slowed down to 14- to 19-minute block times.
This is precisely why bitcoin re-calibrates every 2016 blocks, or about every two weeks, resetting how tough it is for miners to mine. On Saturday, the bitcoin code automatically made it about 28% less difficult to mine a historically unprecedented drop for the network thereby restoring block times back to the optimal 10-minute window.
The bitcoin algorithm is programmed to handle an increase or decrease in mining machines, according to Mike Colyer, CEO of digital currency company Foundry. "It is a self-regulating market that does not require any outside committee to determine what to do. This is a very powerful concept," he said.
Fewer competitors and less difficulty means that any miner with a machine plugged in is going to see a significant increase in profitability and more predictable revenue.
"All bitcoin miners share in the same economics and are mining on the same network, so miners both public and private will see the uplift in revenue," said Kevin Zhang, former Chief Mining Officer at Greenridge Generation, the first major U.S. power plant to begin mining behind-the-meter at a large scale.
Assuming fixed power costs, Zhang estimates revenues of $29 per day for those using the latest-generation Bitmain miner, versus $22 per day prior to the change. Longer-term, although miner income can fluctuate with the price of the coin, Zhang also noted that mining revenues have dropped only 17% from the bitcoin price peak in April, whereas the coin's price has dropped about 50%.
"We are expecting a period of much higher mining profitability for Compass Mining clients," said Whit Gibbs, CEO and founder of Compass, a bitcoin mining service provider. "We expect miners to be approximately 35% more profitable."
Blockcap's Feinstein agrees. "We are expecting a revenue and profit increase for the foreseeable future. This was an unexpected gift to the network, not just on revenues but on decentralization and sustainable energy metrics."
Although the difficulty drop benefits all miners, those using new-generation equipment stand to benefit the most.
Feinstein tells CNBC that most of the gear in China that was turned off was old-generation equipment, which is inefficient and runs on much smaller profit margins.
It is hard to predict how long the hashrate deficit will last. Barbour said that it is totally possible that Beijing could simply reverse their policy, and this could only be a short-term interruption.
If not, most mining crypto experts agree that it will take anywhere from six to 15 months for all of that idle and displaced mining hardware to migrate. "It's going to take a long time for the surplus to find a home," said Barbour.
Gibbs thinks miners should see heightened revenue for at least the rest of 2021.
"Every day the Chinese miners are searching globally for places to turn their machines back on.There is very limited space at the moment," said Colyer.
Part of the problem, according to Feinstein, is that even before China cut off mining, there was already a lack of infrastructure to house the new-generation miners being deployed monthly by Beijing-based manufacturer Bitmain.
Now that the market is flooded with an over-supply of used mining rigs, it is tough to say how fast countries will be able to absorb the influx of gear.
"Some mining companies have had everything built and were just waiting for these ASICs to plug in, which would only take a couple days," explained Arvanaghi.
"Others may need to build containers, extend warehouses, or increase their power capacity. We won't see the hashrate reach what it used to be overnight, but we'll see it tick back up over the next few months," he continued.
Of all the possible destinations for this equipment, the U.S. appears to be especially well-positioned to absorb this stray hashrate. CNBC is told that major U.S. mining operators are already signing deals to patriate some of these homeless Bitmain miners.
U.S. bitcoin mining is booming, and has venture capital flowing to it, so they are poised to take advantage of the miner migration, Arvanaghi told CNBC.
"Many U.S. bitcoin miners that were funded when bitcoin's price started rising in November and December of 2020 means that they were already building out their power capacity when the China mining ban took hold," he said. "It's great timing."
But Barbour believes that much smaller players in the residential U.S. also stand a chance at capturing these excess miners.
"I think this is a signal that in the future, bitcoin mining will be more distributed by necessity," said Barbour. "Less mega-mines like the 100+ megawatt ones we see in Texas and more small mines on small commercial and eventually residential spaces. It's much harder for a politician to shut down a mine in someone's garage."
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Bitcoin mining is now easier and more profitable as algorithm adjusts after China crackdown - CNBC