Canaan, Bitcoin Miner Manufacturer, Targets $100 M IPO; Tether Says Its Stablecoin Is ‘Fully Backed’ Again; PCWorld Reviews the Brave Browser
Weekly Market Update 11/14 — Slight Drop
Weekly Market Recap
Nov 14 — Crypto assets dropped slightly this week, bringing the total crypto market cap to $239bn down from $249bn. The Crescent Crypto Market Index (CCMIX) was down 6%, while BTC decreased by 6.6% over the same period. Every index this week outperformed Bitcoin. With that said CCDARK was the only index in the geen with gains around 1.2%. The Market Index underperformed all other indices over the last seven days. This slight drop follows a week of sideways movement.
Bitcoin vs. CCMIX vs. CCALT vs. CCDARK vs. CCSMART
Nov 8th — Nov 14th, 2019
Market Index Constituent Performance
Nov 8th — Nov 14th, 2019
- BTC performed at the bottom of the pack this week, with 5 out of the other 6 constituents outperforming BTC. Bitcoin was down 5.7% on the week.
- The CCMIX ended the week slightly above BTC. This is primarily due to support from LINK, which increased by 16.7%. The index was dragged down by BTC and XRP. This is the second week in a row, in which BTC and XRP ended the week at the bottom of the group.
- CCSMART, CCALT, and CCDARK overperformed Bitcoin, generating returns of -1.7%, -3.7%, and 1.2% respectively.
- XRP ended last week in the red down 2% as the worst-performing constituent. It ended this week down 7%, again as the worst-performing constituent.
- ETH ended last week in the middle of the pack up around 2%. While down 0.8% this week, ETH was the second-best performer.
- XLM was by far the best performer last week up around 18%. It ended this week with a negligible loss of -1%.
- Bitcoin dominance decreased to 65.9%, down from around 66.9% last week.
Bitcoin mining maker Company, Canaan, intends to raise $100 million in its initial public offering in the U.S. The Huangzhou based manufacturer updated its IPO application with the SEC on Wednesday. It stated that Canaan plans to offer American Depositary Shares (ADS) set at a price between $9 and $11. If successful, Canaan would be the first major Bitcoin miner maker to go public on a US exchange. With their target raise, Canaan would have a diluted market value of $1.5 billion. Canaan revealed that it raked in a profit of $13 million on revenues of $95 million for the third quarter of 2019. It reported a net loss of $45 million for the first half of 2019.
Why Does This Matter?
Regardless of valuation, this is positive news for the digital asset ecosystem. Bitcoin mining equipment manufacturers are an integral part of the digital asset industry. To be able to attain exposure to ASIC manufacturers would be another method of exposure to the digital asset class as a whole. Manufacturers inherently have high committed capital, and usually, have good intentions for the industry. The mining business is both extremely expensive and volatile — similar to oil and gas — where timing a market cycle means everything and capital is easy to deploy. Scale operators have only grown and hobbyist mining has been clearly unprofitable for years. Access to cheap power and a stomach for volatility have underpinned the mining ecosystem. Having previously proposed a larger raise and losing Credit Suisse on the deal does NOT indicate excesive demand from IPO investors. Coming back to the table with an accelerated timeline does reiterate their intention to list. It will be interesting to see if mainstream investors find the thesis compelling — as there are no public comps and very few ways to gain digital asset exposure in a brokerage/trading account.
Tether recently reported that their USDT stablecoin is now fully backed by Tether’s reserves. Sparked by a flawed paper written by John Griffin, a professor of finance at the University of Texas at Austin, and Amin Shams, an instructor the Ohio State University which claimed a single address on the Bitfinex exchange was responsible for manipulating the bitcoin market in late 2017, Tether issued a formal response outlining their criticism. They retorted, “the revised paper is a watered-down and embarrassing walk-back” of the first version.” It was in this response that Tether updated the community that Tether was completely backed by reserves.
Why Does This Matter?
Tether’s reserves, for years, have been a contentious and debated topic. Tether maintained that its tokens were fully backed until April 2019, when general counsel Stuart Hoegner wrote in an affidavit that USDT was backed by “cash and cash equivalents … representing approximately 74 percent of the current outstanding tethers.” Around this time, Tether held $2.1 billion in assets (issuing 2.8 billion USDT tokens). On Tether’s transparency page the company holds more than $4.6 billion in assets, including $4.56 billion in U.S dollars. As for the recent paper, this statement sums it up perfectly. “Furthermore, the authors now admit that the patterns of trading they observed could be consistent with the market purchase of Tethers, as opposed to the issuance of unbacked Tethers. Importantly, the authors do not possess or reference any data disputing that Tether has sufficient reserves to back up Tether token issuances in circulation.”
Brave Software released its long-awaited Brave 1.0. Brave is a privacy-focused browser that incorporates the Basic Attention Token (BAT) in its design. The BAT token is used to pay users of the Brave browser for the attention they give to content and advertisement. Brave not only allows you to accumulate BAT, via ads that slide in as system notifications but also receive BAT that’s paid to you by other users. You can take some of that BAT to “pay” other users, or store it. In the future, you’ll be able to trade it in for other services. The Brave browser has already reported that it has “millions” of users.
Why Does This Matter?
The Brave project is an interesting one. The Brave browser, for one, is impressive and fulfills a market gap. With that said, the BAT token’s economics has much to be desired. As simply a payment token that doesn’t command valuable state, we are unsure of its underlying value capture mechanic. With that said, it does have a moat in the form of the Brave browser. If the developers are steadfast that BAT is the only token used on its browser, there is some clear value there. PC World has this to say on Brave’s overall performance: “ Performance is also table stakes, and the Brave browser is right in the middle of the pack. The distinctions are so slight, however, you’ll probably never notice a shift in performance between one browser and another. We did use three modern Web benchmarks, however, to measure performance between Brave, Chrome 78, the current Edge 44, and Firefox 70.”