As bitcoin, ethereum and other cryptocurrencies get increasing attention from investors, Wall Street and its traditional banks continue to adjust to the shift. Catch up on this week's top stories highlighting the intersection of these old guard and new school areas of finance with this recap compiled by The Fly.
CRYPTO STARTUPS STRUGGLE: Bitmain Technology, a manufacturer of cryptocurrency mining rigs and Houbi Group, operator of one of the world’s largest crypto exchanges, confirmed layoff plans amid an industry crunch that has seen bitcoin’s market value plunge, the South China Morning Post reported Wednesday. Bitmain said in a statement, “There has been some adjustment to our staff this year as we continue to build a long-term, sustainable and scalable business. A part of that is having to really focus on things that are core to that mission and not things that are auxiliary. As we move into the new year we will continue to double down on hiring the best talent from a diverse range of backgrounds.” Meanwhile, a spokeswoman for Huobi Group said the company is “optimizing staffing” by eliminating its worst-performing employees, but the firm is still hiring people for core businesses and emerging markets. Both companies declined to specify the number of job losses.
ELECTRUM WALLETS HACKED: A hacker has stolen more than 200 bitcoin, worth over $750,000, by attacking Electrum wallet apps through a message on users’ computers urging them to download a malicious wallet update from an unauthorized GitHub repository, ZDNet reported Thursday. The attack started on December 21 and admins from GitHub, which is owned by Microsoft (MSFT), took down the hacker’s GitHub repository. Admins of the Electrum wallet expect a new attack to get underway via a new GitHub repo or a link to another download location as the vulnerability at the core of the hack has remained unpatched.
FUND MANAGER SAYS BITCOIN IS NON-CORRELATED ASSET: On Wednesday, Morgan Creek Digital Assets founder Anthony Pompliano told CNBC, “Bitcoin is definitely a non-correlated asset. If you look at the correlation between the digital asset and the S&P 500 over the last 180 days, it’s at zero. If you look at it compared to the dollar index, it’s near zero. It has proven it’s non-correlated, and I expect that to continue.” The founder added that in the short-term bitcoin still has “lower to go”, possibly under $3,000. Pompliano said, “There’s a saying that we have in crypto that says ‘Long bitcoin, short the bankers’ and it’s this idea that cryptocurrency is incredibly transparent…Crypto is still just very small and so we’ve got a fixed supply asset, if increase in demand comes in, you’re going to get an increase in price and we’ll see how it plays out.”
PWC SEES ‘EXCITING THINGS’ FOR CRYPTO IN 2019: PricewaterhouseCoopers managing director Henri Arslanian told Bloomberg Sunday that he believes that the crypto ecosystem has “a lot of exciting things” to look forward to in 2019. “One of them, I think, is really the entry of institutional players,” he said. “In 2018 we saw a lot of the big banks enter the space and in 2019 I expect many more to enter the space as well, in different ways. Some of them may decide to launch their own solutions…Others may try to partner with some of the other crypto firms… And others may try to invest in crypto companies...” Arslanian said he believes regulatory clarity will be the main driver of growing institutional involvement.
RBC LOWERS AMD, NVIDIA ESTIMATES: RBC Capital analyst Mitch Steves lowered his price target on Nvidia (NVDA) to $200 from $230 and lowered his fiscal year 2019 revenue forecast on Advanced Micro Devices (AMD) to $7.29B from $7.41B on Thursday. The analyst said the revisions reflect his observation of a reduction in average selling prices for GPUs of both companies in the secondary market, particularly for Nvidia's GTX 1070 gaming chip. Steves warns that the company may not be able to discern whether the lower prices come as a result of reduced demand in gaming or cryptocurrency related activity, but states that his expectations for Gaming sector are "conservative". Longer term, Steves kept his Outperform rating on both AMD and Nvidia.
CRYPTO STOCK PLAYS: Cryptocurrency revenues have been pointed to as reasons to be bullish on Advanced Micro Devices and Nvidia in select research. Overstock (OSTK), DPW Holdings (DPW), Kodak (KODK), Ideanomics (IDEX), Riot Blockchain (RIOT), Pareteum (TEUM) and Social Reality (SRAX) are other stocks that have been touted, or promoted themselves, as a way to play the crypto theme.
PRICE ACTION: As of time of writing, bitcoin dropped about 9% this week to $3,609 in U.S. dollars, according to TradeBlock.
