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One of the things I most enjoy about working in the crypto sector (apart from my awesome colleagues and the constant flow of fascinating change) is the level of debate.

Im not being sarcastic. There are many takes I strongly disagree with, but when they are put forward by people with rational and inquisitive minds (which can be most of the time, depending on your Twitter filters), the engagement invariably ends up enriching my own opinion. And, sometimes, bouncing someone elses conviction off yours opens your eyes to nuances you hadnt seen. Who knows? Entertaining conflicting points might actually change minds.

Now, when you take twointelligent opinions that you dont agree with, throw them together with yours and stir them up a bit, magic can do its uncomfortable thing. That happened to me this week.

Youre readingCrypto Long & Short, a newsletter that looks closely at the forces driving cryptocurrency markets. Authored by CoinDesks head of research, Noelle Acheson, it goes out every Sunday and offers a recap of the week with insights and analysis from a professional investors point of view.You can subscribe here.

Many of you will already have seen Bloomberg commentator Joe Weisenthals list of six reasons why bitcoin has not had a great year. To recap, they were a lack of new highs, its new correlation with the S&P 500, disappointingly resilient fiat currencies and inflation levels, and a new competitor for the volatility trade in the form of stocks.

Of course, there were many reactions. One of the best responses Ive seen was from Nathaniel Whittemore, who stressed the progress made in institutional uptake, growth in emerging market demand and bitcoins endurance. Another was from Messaris Ryan Selkis, who objected to Joes interpretation of bitcoin narratives and timeframes. I expand on some of my objections further down.

A different angle

The other analysis I disagreed with this week was from JPMorgan, although their take was almost the opposite of Joes.

A report shared with the investment banks clients and seen by CoinDesk boldly stated bitcoin has had a goodyear so far, highlighting that, even through the market turmoil in March, the cryptocurrency only briefly dipped below its cost of production. It also points out that liquidity in bitcoin markets was more resilient than in other more traditional markets. The analysis concludes that this points to a long and happy life for bitcoin, but more as a vehicle of speculation than as a store of value.

So, here we have Joe hinting bitcoin has had a disappointing first half because it didnt have spectacular price moves relative to other asset groups, and JPMorgan inferring its had an unexpectedly good first half for the same reason.

In my opinion, they are both missing the point. But my disagreement with them changed my mind about something.

Common factors

Both JPMorgan and Joe seem to assume there is a clear narrative around bitcoins value.

JPMorgan equates bitcoins intrinsic value with its mining costs, although this is difficult to reliably calculate and reflects only a small part of the ecosystem. Whats more, mining costs could come down in line with lower energy prices, which does not mean bitcoins intrinsic value will come down if we rely on the what an asset is worth definition of the term. The analysts also infer that bitcoins current correlation with the S&P 500 represents the breakdown of its store of value potential, which overlooks the nature of backward-looking short-term calculations.

Joe understands bitcoins fundamental value is hard to quantify, and focuses on price as the principal metric that both shapes and is shaped by narratives. He assumes we have been waiting for specific triggers to drive up the price, that they have not materialized and therefore our narratives are wrong and bitcoin is not doing well.

Both Joe and JPMorgan seem to believe the overriding narrative for bitcoin today is that of speculative asset. This is a valid viewpoint, but not one that I share for me, bitcoin is a technology play that will change the meaning of markets.

I also dont buy into Joes focus on price, and his assumption the market as a whole expects sharp movements based on certain catalysts.

And Im not convinced by JPMorgans conclusion that recent price action points to bitcoins continued use as a speculative asset this week CoinDesk reported more than 60% of bitcoin held in wallets has not moved in over a year.

Thinking about why I disagreed, however, made me realize something I have been overlooking. I have always regarded bitcoins lack of a clear narrative as a strength. I was wrong it is both a strength and a weakness.

The plus and the minus

Its a strength in that the story is still unfolding. Bitcoins main use case is yet to be determined. Many see it as a store of value, in that it has no explicit economic drivers other than a limited supply. Others see it as a speculative asset that swings on sentiment and whose volatility can be harnessed to produce higher returns. For part of the world, it is a stable currency. For some, a venture investment.

In other words, bitcoin is not a one-trick pony the demand growth from any one of its many narratives could be enough to push up its value.

Having many threads to pull on is also a weakness, however, because investors like clear narratives. Professional managers generally need to justify their allocation decisions, and bitcoins story is confusing. Even Paul Tudor Jones expressed skepticism at the success of his preferred narrative, that of digital gold, but invested anyway based on probabilities and price.Bitcoins lack of a clear value and a diluted understanding of its fundamentals lead many smart people such as Joe to focus on price performance as a barometer for success. Its there, easy to watch, easy to track. And in a markets-centric world, thats good enough for some.

Value, on the other hand, depends partly on fundamentals, which in the case of cryptocurrencies are still poorly understood. It also depends on sentiment, which is the result of stories and expectations, not just of cryptocurrencies but also of environments and influencing factors. You think bitcoin has confusing narratives? Lets talk about tech stocks, oil, the dollar, take your pick.

So while I still believe rapidly evolving narratives around bitcoin are an opportunity, and that the fundamental value drivers of the cryptocurrency will become better understood with time and patience, I also accept now that a lack of clarity around what those are makes the price an understandable value proxy for many.

The formula

However, recent market trends have shown us price is increasingly disassociated from value, not just in cryptocurrencies. In todays stock, bond and even currency markets, price is often totally out of whack with the underlying potential. It doesnt mean that price is not important; it just means that its not something that shouldbe taken as a proxy for value or for success as we look forward.

As an industry, we need to work on honing our understanding of the many narratives, and how they can influence value. We all need to learn to ask deeper questions, to entertain conflicting ideas and to accept that we just dont know what the winning story if there is one will be. Were getting better at metrics, a broader range of people are participating and our collective understanding is moving forward every day. But stories evolve, as they must to survive. We need to work on giving the stories scrutiny, as well as a broader vocabulary and set of tools that can enhance their telling.

Anyone know what's going on yet?

Talk about conflicting signals: Stocks seem to be pricing in a booming economy, bonds are forecasting a protracted downturn in spite of heavy government and central bank buying, and currencies are all over the place. Given the momentum, investors seem to be accepting this conflict the worry is that it becomes the new normal.

Signs of a COVID-19 resurgence, though, are causing some jitters but even so, the reality of the economic damage does not seem to have sunk in, in spite of even the Chairman of the Federal Reserve warning of hardship ahead.

Bitcoin has had a lackluster month so far, underperforming most other asset groups while maintaining its newfound correlation with the S&P 500.

Chain links

WisdomTree Trust has filed for an ETF that may invest up to 5% of its net assets in the Chicago Mercantile Exchanges (CME) bitcoin futures contracts. If approved, the rest of the fund would be invested in traditional commodities. TAKEAWAY: Early last year Reality Shares filed an exchange-traded fund proposal that included a partial investment in bitcoin futures, but the application was withdrawn at the SECs request. Its possible the market and regulatory sentiment have evolved over the past 16 months such that this filing will meet a different fate to start, there are differentiating technicalities between this filing and last years, and the bitcoin futures market has grown considerably. But we shouldnt hold our breath. If it doesget approved, it will not have the same market impact as a straightforward bitcoin ETF, given the funds limited exposure and focus on the futures markets.

Asset manager Wilshire Phoenixhas filed to launch a bitcoin investment trust. TAKEAWAY: Like the Grayscale* bitcoin trust, if approved this will list on an OTC market and have fixed redemptions. Grayscales GBTC bitcoin trust is often criticized for the high premium retail investors have to pay to buy shares on the secondary market. If approved, this trust could add competition and reduce the premiums. Or, in the absence of a bitcoin ETF, demand could grow such that well have two sets of high premiums.(*Grayscale is owned by DCG, the parent of CoinDesk.)

Mason Privatbank Liechtenstein AG has become the latest private bank to offer digital asset custody through a partnership with Hong Kong-based Hex Trust. TAKEAWAY: News about European private banks offering crypto services seems to be gracing our headlinesmore frequently these days. These banks tend to be small by U.S. standards, but they focus on institutional clients and high-net-worth individuals, so their potential reach when it comes to crypto services is significant. And the range of services they are offering is similar to full prime brokerage, with trading, custody, lending and banking services rolled into one. We will most likely see more announcements like this in the remainder of the year, each of which provide new onramps to satisfy the growing interest they expect to see.

After two years of development, Komainu a joint venture between Nomura Holdings, CoinShares and Ledger has launched to offer crypto asset custody to institutional investors. TAKEAWAY: The entity is based in the U.K.s Jersey Channel Islands, and will provide custody, compliance and insurance services. The pedigree of the partners is interesting: Nomura is one of Japans largest investment banks (yes, a legacy bank investing in crypto custody!), and Ledger is one of the sectors original custodians. CoinShares is one of the sectors longest-running asset managers (as well as manager of a handful of listed crypto funds), and now also provides trading services, index management and tokenized assets. With the addition of custody, could CoinShares be angling to break into the crypto prime brokerage business?

Codefi, backed by Ethereum development group ConsenSys, is working on an Eth 2.0 staking API, which aims to help large exchanges, wallet providers, custodians and funds earn income from a portion of their crypto asset holdings. TAKEAWAY: As the launch of the transition to Ethereums new blockchain nears*, interest in staking seems to be growing. This could pick up steam as demand is fueled by the record-low yields on other traditional asset groups, and as service providers become more robust and user-friendly. (*TEASER: We will soon be publishing a report on what this transition means for Ethereum and for investors.)

Chinese bitcoin miner manufacturer Ebang estimates it incurred a net loss of $2.5 million on a revenue of $6.4 million for Q1 2020. This disclosure was posted this week in an update to the firms IPO prospectus filed with the SEC. TAKEAWAY: A Chinese loss-making company trying to raise shares in a U.S. listing? In these crazy markets, it could do very well. However, the listing may be denied due to a lack of inspected audits or for a lack of revenue, or a number of other reasons. (For a detailed breakdown of the Ebang filing, see our report Ebang IPO: Dude, wheres my revenue?)

According to data from crypto analytics firm Glassnode, over 60% of all bitcoins have not moved in at least a year. TAKEAWAY: Contrary to some analyses (see THE BRIEFING above), this indicates that the buy-and-hold strategy is gaining ground. True, a chunk of these coins may be in wallets with lost keys, but the overall trend indicates that holders are still holding. The number of bitcoin that hasnt moved in 2-3 years grew by over 25%.

Jeff Dorman of Arca Funds compares the crypto asset universe to the bond market, arguing that the two asset groups have much in common in terms of investor specialization and arcane math. TAKEAWAY: Great insight into how valuation models are still evolving, and have a way to go still.

The Financial Services Commission of Mauritiushas created a regulatory regime for a full-fledged security token ecosystem. TAKEAWAY: This is interesting given that the island state was one of the early sovereign nations to embrace the potential of becoming a blockchain hub, and is pretty far along in setting up legal frameworks for a wide range of crypto-related businesses. Combine that with its status as a tax haven that has attracted a growing base of high-net-worth individuals, and the imminent likely blacklisting by Europe as a high-risk third country, and you can start to catch a glimpse of where fully functioning crypto financial system could flex its resilience, even if its at a small scale. Worth watching.

Over a recent 30-day period, the total open interest for CME bitcoin options increased more than tenfold to over $370 million, making it the second largest bitcoin options market in the industry, behind Deribit. TAKEAWAY: Open interest for Deribit has also reached all-time highs, almost double the 2019 high reached almost exactly a year ago. This growth indicates a solid maturation of the crypto markets overall, and could unleash increasingly aggressive trading strategies as risk-takers feel more comfortable with the hedging tools available.

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The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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What Changed My Mind About Bitcoin Narratives - CoinDesk - CoinDesk

For the fifth straight week, bitcoin is locked in a low-volatility squeeze similar to one seen ahead of a sudden $2,350 rally in October 2019.

While the cryptocurrency has leapt over 4% in the past 24 hours, prices still remain trapped between $9,000 and $10,000. In fact, the top cryptocurrency by market value has spent the better part of the last two months trading in that narrow range, according to CoinDesks Bitcoin Price Index.

Due to the persistent lack of clear directional bias, the Bollinger bandwidth, a price volatility gauge, has declined to 0.08, the lowest level since mid-October 2019.

Bollinger bands are placed two standard deviations above and below the 20-day moving average (MA) of price. Meanwhile, the Bollinger band width is calculated by dividing the spread between the volatility bands by the 20-day MA.

Bitcoin witnessed a bull-bear tug of war in the range of $7,700$8,600 for over three weeks, starting from Sept. 26, 2019 (above right). As volatility fell, the Bollinger bandwidth declined to 0.08 on Oct. 17.

A prolonged period of low-volatility consolidation often paves the way for a big move in either direction, according to technical analysis theory. Thats what happened in four days after Oct. 17. The cryptocurrency suffered a minor drop from $8,000 to $7,300 on Oct 22-23 only to rise sharply to $10,350 by Oct. 26.Essentially, prices rallied by $2,350 in the nine days following the volatility gauges drop to 0.08.

Over the past two years, there have been a number of instances where a below-0.10 reading on the bandwidth indicator marked a sudden explosion in volatility.

The sudden upswings in prices seen in early January 2020 and April 2019 were both preceded by a drop in bandwidth to below 0.10.

Its important to note, of course, that prolonged consolidation only promises big moves, and does imply anything about the ultimate direction of prices. In the past, bouts of low-volatility trading have ended with big price slides, too.

So, if history is a guide bitcoin may well break out of its restricted trading range over the next few days.

In traditional markets, options traders often take straddles in a bid to profit from an impending strong directional move following a dull trading environment. The non-directional strategy comprises buying both calls (bullish bets) and puts (bearish bets). Goldman Sachs, for example, likes straddling when stock volatility is low.

While the future direction of prices is uncertain, with central banks taking unprecedented steps to counter the coronavirus-induced recession with massive stimulus packages, the fundamentals may be aligned in favor of a big bullish move.

Further, investors look to be adding bets to position for a rally in the cryptocurrency, according to options market data.

The Chicago Mercantile Exchange appears to be stepping up its options presence as were seeing some larger orders come into the market with mainly call buying from 11k-13k one to three months forward, said Chris Thomas, head of digital assets at Swissquote Bank.

Disclosure:The author holds no cryptocurrency assetsat the time of writing.

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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The Last Time Volatility Was This Low Bitcoin Went On to Rally By $2K - CoinDesk - CoinDesk

There are 21 million Bitcoin. Thats it. Once theyre all mined, which should occur in around 2140, no new Bitcoin will enter circulation.

The Bitcoin blockchain was designed around the principle of controlled supply, which means only a fixed number of newly minted Bitcoin can be mined each year until a total of 21 million coins have been minted.

Once all 21 million BTC have been mined, the network will largely operate the same as it does now, but with one crucial difference for miners.

Approximately every ten minutes, Bitcoin miners discover a new block, solving a cryptographic puzzle that allows the successful miner to add the newly discovered block to the blockchain. This block is filled with transactions that were previously waiting in the Bitcoin memory pool, usually chosen based on the size of the transaction fee they provide to miners.

In return for discovering a block, the miner receives a fixed Bitcoin block reward. When Bitcoin first launched, the reward was set at 50 BTCbut it halves periodically, after 210,000 new blocks have been discovered. That happens roughly every four years, reducing the reward to 25 BTC, 12.5 BTC, 6.25 BTC, and so on. Three halvings have been completed so far; the most recent Bitcoin halving occurred on May 11, cutting the block reward to 6.25 BTC.

Bitcoin miners will be able to continue earning block rewards until a total of 21 million BTC has been minted, after which no new Bitcoin will enter circulation. Currently, around 18.4 million BTC has been produced, equivalent to minting 87.6% of the maximum supply in just over a decade. But it will take another 120 years before the last Bitcoin ever is minted, due to the gradual reduction that occurs every four years as a result of the halving process.

Once all 21 million Bitcoin have been minted, Bitcoin miners will still be able to participate in the block discovery process, but they wont be incentivized in the form of a Bitcoin block reward. Thats not to say they wont be rewarded at all, though.

As well as block rewards, Bitcoin miners also receive all the fees spent on the transactions included in each newly discovered block. Currently, transaction fees make up a small proportion of a miners revenues, since miners currently mint around 900 BTC (~$8.5 million) a day, but earn between 30 to 50 BTC ($285,000 to $475,000) in transaction fees each day. That means transaction fees currently make up as little as 3.3% of a miners revenuebut in 2140, thatll shoot up to 100%.

"Changes to the Bitcoin ecosystem could drive significant changes in miner adoption even after the block rewards stop"

Simon Kim

Losing the block reward wont disincentivize miners, according to Simon Kim, CEO of VC fund #Hashed. Changes to the Bitcoin ecosystem and its place as a key currency in the virtual world could drive significant changes in miner adoption even after the block rewards stop, Kim told Decrypt.

Its true that switching to a pure transaction fee-based rewards would almost certainly decimate the mining network now, since few Bitcoin miners would be able to profitably mine Bitcoin if they received just 3.3% of their typical rewards. However, if the network were to explode in usage, then competition for block space could increase dramatically, which would likely lead to increased transaction fee rewards for minerssimilar to what was seen during Bitcoin's 2017 bull run.

At its peak in December 2017, the total transaction fees paid per day spiked to 1,495 BTC at a time when Bitcoin was valued at $14,000. As a result, miners earned a total of $21 million in transaction fees that daymore than miners currently earn from the block reward, indicating that something similar could occur in the future.

Another possibility on the cards is that the reward mechanism for Bitcoin could change some time before the final block is mined. Luka Bokin, CMO of crypto trading platform NewsCrypto, argued that as the number of BTC produced through mining decreases, Bitcoin will undergo significant changes to its protocol. That could eventually include a switch to a more environmentally friendly consensus mechanism like Proof of Stake or another successor to Proof of Work, he told Decrypt.

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What will happen to Bitcoin after all 21 million are mined? - Decrypt

American Bitcoin mining farm Core Scientific today announced that it has bought 17,595 Bitcoin miners from Bitmain, the troubled Chinese Bitcoin mining manufacturer. This is the largest number of Bitmains S19 miners bought by a single blockchain company, it claims.

The S19 is Bitmains newest and most powerful Bitcoin miner. Bitcoin miners are powerful, purpose-built computers used to confirm transactions on the Bitcoin blockchain; miners are rewarded with Bitcoin for solving computationally intensive puzzles. But the race to mine Bitcoin gets more difficult when more people start mining.

Companies like Core Scientific have to keep on buying new Bitcoin miners to outpace everyone else. They buy lots of miners so that they earn lots of Bitcoin.

On May 11, the Bitcoin halving occurred, cutting the rewards for mining Bitcoin in half, meaning that revenues of the mining companies would halve if they didnt buy new miners. This happens every four years, and means that mining farms must buy more powerful miners to remain competitive.

Core Scientific is one of the biggest mining companies in the US; its miners use over 450 megawatts of power. It also mines other cryptocurrencies.

With market-beating long-term power contracts in place and the most powerful miners ready to be deployed at a moments notice, Core Scientific is well-positioned to facilitate our clients digital mining needs at a considerably faster pace than the competition, said Kevin Turner, president & CEO of Core Scientific.

Most Bitcoin mining farms are located in China, where the costs of running Bitcoin mining farms are lower. Thats because the electricity is cheaper. Mining farms use cheap hydroelectric power in the rainy season and use icy winters to save on cooling costs.

Bitmain, the company from which Core Scientific bought the miners, is in turmoil because of a dispute between its two founders, Wijan Wu and Micree Zhan. The spat has threatened the production and delivery of new miners, which were already in short supply.

For the next four months, Core Scientifics newly bought miners will be distributed among Core Scientifics 655,000 square foot network of data centers, which is spread across the US. It said that the first batch of miners are operational today.

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Bitcoin mining farm buys up 17,600 minersdespite the halving - Decrypt

On Friday, June 26, the China-based Zhejiang Ebang Communication, often referred to as Ebang, will be listed on Nasdaq, according to various reports. Ebangs initial public offering (IPO) will be the second U.S.-based IPO for an ASIC mining manufacturer joining the company Canaan. The Ebang IPO prospectus was also updated on June 17, raising the fundraising goal to $106 million after the company previously filed for $100 million.

A myriad of regional reports indicates that the Chinese company, Ebang will be listed on the American stock exchange Nasdaq located in New York City this Friday. Nasdaq is the second most popular stock exchange in the U.S., ranked only behind the New York Stock Exchange (NYSE).

News.Bitcoin.com reported on rumors of Ebang filing an initial public offering prospectus on December 6, 2019. The initial $100 million filing with the U.S. Securities and Exchange Commission actually took place on April 24, 2020. The filing notes that when the shares are listed on the Nasdaq Global Market exchange the ticker symbol will be EBON.

Following the original filing last April, weeks later on June 17, Ebang submitted its Q1 2020 earnings and updated the fundraising goal from $100 million to $106 million. After the update, the crypto pundit Samson Mow tweeted an invitation sent to him in regards to Ebangs IPO afterparty. The afterparty is allegedly scheduled for Friday, June 26, and a report published by the regional publication Blockbeats confirms the listing launch as well.

Ebang International Holdings decided to choose Nasdaq and offer 19.3 million shares. The company shares will be sold at a price range between $4.50 to $6.50 per share. Calculations show that the firm would have a market valuation of $721 million.

Of course, Canaan Creative also filed for an IPO in the United States as well with the SEC, and its original goals were to raise $400 million on the Nasdaq Global Market. That never came to fruition, and on November 21, when the Chinese mining rig manufacturer Canaan launched its initial public offering (IPO) sale, it only sold $90 million worth of U.S. shares.

Canaan shares initially sold for $8.99 and today shares are selling for $2.12 per CAN (NASDAQ: CAN), which is a 76.4% loss in value. Additionally, the two mining manufacturers who have not gone IPO just yet, Bitmain and Microbt, still control a dominant share of mining rig sales worldwide.

With Ebangs plans to launch on Nasdaq on June 26, under the symbol EBON, the company has enlisted Prime Number Capital, AMTD Global Markets, and Loop Capital Markets as book-runners. The company founded in 2002, will hold an IPO celebration ceremony at a hotel in Hangzhou, according to the local reports.

The recent IPO sent to SEC indicates that while Ebang made $109 million last year, the company also had a $41 million deficit in 2019. The firm is run by CEO Don Hu, CFO Lei Chen, and the deputy general manager Chunjuan Peng.

Ebang is also involved in an ongoing lawsuit initiated by Shenzhen-listed Wholeasys subsidiary Beijing Cailiang. The lawsuit involves an $80 million mining investment gone sour and Ebang claims that Cailiang played a victim and wholeheartedly disagrees with the lawsuit.

Despite the litigation and revenue losses, Ebangs IPO will likely happen unhinged this Friday. Its not uncommon for mining manufacturers to be embroiled in lawsuits, as many of the top four firms are involved in litigation proceedings and also lost revenue in 2018 and 2019 as well.

What do you think about Ebang being listed on Nasdaq on Friday, June 26, 2020? Let us know what you think in the comments section below.

Image Credits: Shutterstock, Pixabay, Wiki Commons, Ebang, Nasdaq

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Bitcoin Mining Chip Manufacturer Ebang to List on Nasdaq This Week - Bitcoin News