Daily market review for 19.07.2018

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2018-07-19 12:19:56

Bitmain, one of the largest companies in the cryptocurrency industry, opened an office in Silicon Valley on the eve of the planned initial public offering (IPO) this year.

Silicon Valley Business Journal reports that the Chinese manufacturer of mining equipment has just entered an office space of 20,000 square feet in downtown San Jose, California, taking the last available seats in the Riverpark Towers office building. This city has become a hub of technological start-ups, such as Okta, Cohesity and WeWork.

The expansion of Bitmain and its appearance in the Silicon Valley is not surprising. After the completion of the round of financing of $400 million last year, now the firm is estimated at $12 billion. This makes it not only the most expensive cryptocurrency company, but also one of the most expensive high-tech start-ups in the world. According to reports, the firm believes that in the near future it can reach a value of $40 billion.

And although decentralization is the main mantra of the cryptocurrency community, companies in this industry still tend to focus around the same geographical locations as the broader technology industry.

In this case, the purpose of the expansion may be the intention of Bitmain to improve the management of its growing digital empire. The company is carrying out targeted expansion into North America (in part because of the uncertain future of the industry in China) by opening mining centers both in Washington state and in Quebec.

Bitmain also began making large investments in other technology start-ups, and venture company team without doubt will benefit from moving to Silicon Valley.

As it was reported earlier this year, Bitmain led the round of funding and invested $110 million in Circle to create a competitor to Tether. The companies have teamed up to work on a joint project to create a token provided by the US dollar.

Quite recently, Bitmain invested $50 million in the Opera browser, receiving a controlling stake in the company. Although Opera occupies only a small niche in the western world, it is widely used in Africa. Soon after Bitmain had invested in Opera, the company announced that it would integrate its own Ethereum wallet into the web browser.

Just this week, Bitmain, together with the co-founder of PayPal, Peter Thiel, led the round of financing of the blockchain start-up called Block.one, the creator of the EOS cryptocurrency. The amount of funding was not announced.

However, despite all its investment activities, Bitmain is in the center of the scandal concerning the centralization of Bitcoin mining. The Bitmain pools of BTC.com and Antpool, according to the statistics of mining operations, in June 2018, produced about 27% and 15% of the network blocks, respectively. Although Bitmain claims that the operations of these pools are independent of each other, the potential opportunity for full management of the network by one company is a significant cause for concern among community members.

In this regard, at the beginning of the month, with the support of some Bitcoin Core developers, a non-profit PoWx fund was launched. The purpose of the fund is to develop the idea that the work-proof algorithm (PoW) acting in Bitcoin blockchain can be replaced by a newer and supposedly more sophisticated algorithm - the “optical” work-proof algorithm. With the new algorithm, more energy-efficient laser technology is used as a cornerstone of the production of cryptocurrency. It is supposed that this will help to eliminate the centralization of mining, for which Bitmain is in large part responsible.

Now, let's move to the technical analysis of Bitcoin (BTC):

Bitcoin continues to consolidate, being in the narrow corridor between $7,500-$7,200. Perhaps it will fell to the support level of $7,060. If it doesn't, but immediately goes up, then we can ascertain the strength of the uptrend. The nearest resistance level is $7,750.

Technical analysis of Ethereum (ETH):

Ethereum, as we had expected, fell to the support level of $475, even a little deeper, to around $465. Then it rebounded and is consolidating now. The nearest resistance level is at $500. The nearest support level is at $460.

Technical analysis of Ripple (XRP):

Ripple fell to the support level of $0.46, then it began to consolidate. We expect a further upward movement. The nearest resistance level is at $0.50. The nearest support level is at $0.46.

Disclaimer. This review is only for information purposes and cannot be considered as a proposal or an indication to perform certain transactions in the financial and commodity markets. The estimates and recommendations in the review are the personal opinion of the company's analysts. The company's view on the prospects for individual financial instruments is valid as of the date of the report. The Company does not assume any liability and liabilities for compensation for damage that may result from the use of this report.
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