Academy Industry Analysis Article

Institutional Bitcoin Bulls, TRON Report, Bitmain Infighting: Crypto News of the Week

2020.05.09

This past week saw Bitcoin’s (BTC) price surge over $10,000 for the first time since February in anticipation of its third block reward halving, scheduled for Tuesday May 11. 

News from the crypto industry this week included bullish BTC investments, high-profile corporate drama and the disappointing effects of stringent United States securities law. 

Top five stories this week

Paul Tudor Jones’ fund may trade BTC futures as a hedge against inflation 

On May 7, hedge fund manager and macro investor Paul Tudor Jones announced that his Tudor BVI fund is prepared to trade Bitcoin futures. 

In a letter to investors titled “The Great Monetary Inflation,” he told investors that he was betting on Bitcoin — which he qualified as a store of value. He said his turn towards BTC was motivated by the unprecedented monetary policies currently being put into place to mitigate the effects of the COVID-19 pandemic.

Like many before him, Jones compared Bitcoin to gold, stating: “Bitcoin reminds me of gold when I first got into the business in 1976.” In terms of how much was invested, Jones noted that for buying BTC futures, the fund was prepared to start with a maximum “low single digit exposure percentage” of its net assets, which currently stand at around $22 billion.

Takeaways:

1. Many in the crypto industry have hailed the news as validation of crypto — and specifically Bitcoin — as an asset class and a signal of more institutional investment to come.

2. The timing of Jones’ big reveal — just before Bitcoin’s block reward halving — should be noted. Jones made his awareness of the halving clear in his investor letter.

As many analysts predicted, in the past week leading up to Bitcoin’s block reward halving the coin’s price has surged over 12 percent to trade near $10,000. BTC this week gained almost 150 percent in value since its crash in mid-March. 

3. This is not actually Jones’ first interaction with Bitcoin. According to Bloomberg, the investor previously owned BTC in 2017, selling it near its all-time-high of $20,000 per coin. 

TRON reported receiving $2 million in coronavirus-related aid from the U.S. government

On May 5, blockchain platform Tron (TRON) reported that the firm’s U.S.-based team had received cash assistance as part of the CARES act. The report, published on what appear to be two of its official Chinese social media accounts, claims that the firm has received approximately $2 million in small business relief so far and is expecting a second batch of COVID-19-related aid. 

Oddly, the posts on Tron’s WeChat and Weibo on the topic cite “foreign media reports” and “people familiar with the matter.” As its source, Tron’s WeChat post also links to what appears to be an individual’s account on Weibo, which allegedly provided the original report, in turn citing “industry insiders.” 

Tron has yet to confirm the news directly in Chinese or English, with a spokesperson for the Tron Foundation telling The Block on Thursday “we are unable to comment.” 

OKEx Insights also reached out to the firm for comment, but has not received a response by press time. 

Takeaways:

1. Both the individual Weibo post and Tron’s official posts make explicit reference to the notion that Tron receiving aid from the U.S. government proves the company’s legitimacy and “value” in the eyes of U.S. regulators.

2. Tron founder Justin Sun is widely known in the industry for his shameless promotion of his blockchain (whose tagline is, nevertheless, “decentralize the web”) and associated projects and his elaborate PR stunts.

3. Crypto Twitter (in English) met the news with outrage, recalling Sun’s arguably most famous stunt — a record-breaking $4.5 million bid in a charity auction to have lunch with Warren Buffet last year. The criticism generally centers around the argument that Tron — though its U.S. firm may technically qualify for relief — does not actually need said aid and in applying for it is taking away from small businesses that actually do. 

Telegram tells US investors they can no longer fund its blockchain project TON

On May 4, the crypto industry’s favorite messenger app, Telegram, sent a letter to United States investors in its much-awaited blockchain protocol, TON, telling them to leave the project.

The firm says it will refund U.S. investors 72 percent of their funds (this is an update from last week’s notice to all TON investors, which left them with a choice of taking a 72 percent refund now or waiting until April 2021 for a 110 percent refund via loan).

The move is in connection with ongoing legal action against Telegram by the U.S. Securities and Exchange Commission (SEC). TON was originally supposed to launch in October 2019 after Telegram raised $1.7 billion in two private sales of the platform’s token, GRAM. The launch was delayed because of an emergency action filed by the SEC that same month, accusing Telegram of preparing to sell unregistered securities to U.S. investors. 

Last month, the firm announced a further launch delay to April 2021, following a court ruling in the ongoing SEC case. Telegram explained its latest decision, to exclude U.S. investors entirely, by citing an “uncertain regulatory attitude in the United States.” 

Takeaways:

1. Back in 2018, Telegram filed for exemptions with the SEC for its sale of GRAM — or rather rights to the tokens, which will only be delivered when TON launches — to accredited U.S. investors. The SEC’s 2019 emergency action alleged that once GRAM is launched, investors and Telegram would be able to sell the tokens, which are not registered as securities in the U.S., for profit. 

2. The industry hype around TON is driven by the fact that it is expected to be integrated into the popular messenger itself, potentially providing for immediate, widespread adoption. Telegram itself has not confirmed any details about how TON will be implemented, except to say that it will be an open-source, decentralized protocol. 

Square Cash App sees record high quarterly Bitcoin revenue

Crypto-friendly payment app Square reported a record $306 million in revenue from Bitcoin sales last quarter in an earnings report published on May 6. In March, the company told investors that it had seen increased “adoption and engagement” with BTC investing in recent weeks. 

Takeaways:

The timing of Square’s numbers signal that interest in Bitcoin is growing in light of market conditions associated with the coronavirus pandemic. 

Mining giant Bitmain execs literally fight over the firm 

Yesterday, May 8, Bitmain co-founder Micree Zhan — who was exiled from the firm last year by fellow co-founder Jihan Wu — was evidently involved in a physical confrontation with another Bitmain executive over company documentation.

The incident took place at the Industry and Commerce Bureau in Beijing, where Micree was reportedly picking up a document proving that he has the status of a legal representative of the firm Beijing Bitmain Technology.

One of Bitmain’s top executives, Luyao Liu, confronted Micree as a crowd formed around them in the building and took the document from him in what appeared to be a physical struggle. Both parties were reportedly arrested.

Later that day, Bitmain released a statement saying that Luyao is the “current legal representative” of the company. The note also underlined that Micree “no longer holds any position” at Bitmain. 

Takeaways:

1. Bitmain’s ongoing internal dramas continue as the company reportedly prepares to go public in the U.S. 

2. As of November 2019, Bitmain dominated a 75 percent share of the crypto mining hardware market.


Follow Okex Insights:

Twitter: https://twitter.com/OKExInsights

Telegram: https://t.me/OKEx_Insights

Recommended