Bitcoin cash (BCH) rallied for most of this week, outperforming other major digital currencies, and cryptocurrency giant Bitmain revealed an initial public offering plan that will bring the cryptocurrency world ever closer to mainstream capital markets.
Bitmain garnered $742.7 million in profit during the first half of the year, according to financial statements audited by KPMG, marking a nine-fold increase from the prior year. Bitmain’s customer base also nearly doubled from 2017 to the end of June, from 46,000 to 80,000.
“Bitmain proved that they’re a serious juggernaut in the space,” Anthony Pompliano, founder and partner at Morgan Creek Digital, tells ThirtyK. “They’ve grown at an insane rate, and demand doesn’t appear to be slowing.” Pompliano, however, believes many crypto assets are still overvalued and “need to come back down to reality.”
Investors Pile Into XRP
Friday afternoon, bitcoin cash was down 4 percent late Friday afternoon to $539.79, according to ThirtyK data provided by CoinMarketCap, after hitting a high of $578.93 earlier in the week. Over the past seven days bitcoin cash was up 8.7 percent. Bitcoin (BTC) was up 0.7 percent at $6,652.92 while ether (ETH) was off 0.6 percent to $222.21.
Ripple (XRP) was also in the spotlight this week, passing Ethereum’s market cap of $22 billion earlier in the week and becoming, for a time, the world’s second-largest cryptocurrency by total market capitalization after bitcoin. By week’s end, however, XRP had slipped back into third place. Friday afternoon it was up 0.06 percent at 54 cents. Double-digit price movements feel unsustainable without any material change to the underlying fundamentals, Pompliano said.
Analysts peg the investor enthusiasm earlier on XRP to the company’s announcement of a new product, xRapid, designed to help banks enhance the speed of transactions. Ripple Labs develops blockchain-based solutions for cross-border payments and settlements. Its xRapid product uses the XRP coin as a bridge between various fiat currencies, allowing payment providers and banks to more quickly process cross-border transactions. Ripple has pointed to mid-October for the launch.
For its related xCurrent product, a number of well-known financial institutions have already signed on, including American Express, Santander Bank and Western Union. Many investors are convinced more will come on board, with Ripple’s technology eventually becoming the norm for how the world’s banks move money across borders.
In June, at a Money 20/20 conference, Ripple CEO Brad Garlinghouse told CNBC that by the end of 2018, “major banks will use xRapid as a liquidity tool.” He hopes that by the end of 2019 it will be dozens of banks.
News Breeds Speculation
Evercoin founder Miko Matsumura tells ThirtyK that given the current speculative market, news tends to trigger more speculation. “Ideally, the combination of regulation and serious products will start a new trend in the industry that will focus on value and primary investment,” he said.
Matsumura is watching for further innovation in the exchange business, “as this is probably the area most fraught with market manipulation.” Regulators increasing their scrutiny should help. Matsumura doesn’t expect a central authority to solve problems in the industry, however. “We need to also ensure that bad actors are removed from the space,” he said.
In other news, Google announced this week it will allow regulated cryptocurrency exchanges to advertise on its platforms in the U.S. and Japan beginning in October. The announcement removes certain restrictions the company had put on cryptocurrency ads back in June. Google follows Facebook is easing restrictions. In June, Facebook started allowing pre-approved cryptocurrency advertisers.
The move “should help crypto companies ramp up user acquisition in the coming months,” said Pompliano. “This is important as companies focus on driving adoption.”