Bitcoin ATMs double, investors in Africa and South America are enthusiastic, is it time for the crypto market to "recover"?

OKEx Intelligence Bureau's Industry Weekly Report takes you through a quick review of this week's industry trends and helps you interpret the crypto ecosystem.

Table of contents:

• Market Overview

• Cryptocurrency Market

• Mining News

• Industry Voice

• Blockchain industry empowerment

• Industry anecdotes

1. Market Overview

As of 16:00 on June 19, 2020, according to CoinGecko data, the total market value of the cryptocurrency market was 265.4 billion US dollars, and the total market value fell by 0.2% in 7 days. The market sentiment index was 39, which was at the panic level; the USDT OTC premium rate was -0.68%, and the average OTC price was ¥7.03.

According to OKEx spot, as of 16:00 on June 19, BTC was temporarily reported at $9,283 (-1.78%), and OKB was temporarily reported at $4.92 (-2.15%). In the past week, BTC continued to fluctuate in the $8,700-10,000 range. Compared with last week, the overall trend was a downward trend in fluctuations. The intraday price of the coin fell below the $9,000 integer mark, reaching a minimum of $8,910.4, and there was still 300 points of room for decline from the lower track of the box, $8,700. BTC failed to continue its strong performance after being blocked at $9,600 in the early part of this week. The trend began to fall on Wednesday, falling below $9,400 and falling above $9,200 before finding support. It is now temporarily stabilized.

On the whole, in terms of news, the economic outlook of the external market is still uncertain due to the impact of epidemic prevention and control; in terms of data, the daily trading volume of Bitcoin on the exchange hit a recent low, indicating that the market is cautious; in terms of technology, as the price of the currency falls again, market sentiment will weaken in the short term.

2. Cryptocurrency Market

1. Ethereum developers: The final multi-client testnet may be launched in July

On June 17, the "Hello, ETH 2.0" online bilingual AMA jointly organized by OKEx Mining Pool and ECN Community was successfully held. The event invited global Ethereum community leaders, including Afri Schoedon, a pioneer developer of the multi-client testnet of ETH2.0, who said that the exact date for the launch of the mainnet cannot be given at present, but the final multi-client testnet may be launched in July. After the final multi-client testnet can run stably for two to three months, that is, there are no consensus problems on the testnet, no permanent forks will occur, and all clients should reach a consensus on the main chain, the launch ceremony can be held and the staking contract can be deployed. Technically speaking, ETH2.0 will be officially launched afterwards.

[Interpretation] Ethereum 2.0 is another hot topic this year after the Bitcoin halving. Ethereum 2.0 is divided into three phases, namely Phase 0: Beacon Chain Implementation; Phase 1: Sharding Data; Phase 2: State Execution. Phase 0 is currently being deployed. After this phase is successfully launched, users are allowed to stake 32 Ethereum (BETH) to become validators. In addition, ETH1.0 will not be abolished immediately, and will coexist with ETH2.0 for 3-5 years. The consensus mechanism will gradually transition from PoW to PoS to solve the problem of Ethereum's poor performance.

The overall solution of Ethereum 2.0 is to improve the performance of Ethereum mainly through PoS+Sharding (sharding technology). Among them, PoS means that new nodes need to go through at least one transaction to participate in the consensus (such as mortgage, voting...), while Sharding is a "divide and conquer" on-chain expansion method to improve the processing performance of on-chain data.

2. Bloomberg: Bitcoin price trend did not meet expectations, and investors turned to traditional stock markets

According to Decrypt, Bloomberg recently published a new analysis article stating that during the coronavirus epidemic, Bitcoin's price trend did not meet people's expectations and did not become digital gold. At the same time, the correlation between Bitcoin prices and traditional stock markets is much higher than many experts predicted. Not only that, many investors have recently begun to turn to traditional stocks, looking for volatility and asset price trends.

[Interpretation] Whether Bitcoin is "digital gold" or a safe-haven asset, these issues have always been controversial. Some of Bitcoin's properties are indeed similar to those of gold, and it even has advantages that gold does not have. However, considering that Bitcoin's market value is still very small compared to gold, and its liquidity is extremely high, it is extremely vulnerable to the impact of the traditional capital market and has large fluctuations. Therefore, OKEx Intelligence believes that Bitcoin cannot become a safe-haven asset in the short term. However, in the long run, as human society gradually shifts to digitalization, digitalization of payment methods has become a trend, and the young millennials' consensus on the value of Bitcoin is gradually deepening. In the future, Bitcoin's "digital gold" status and safe-haven properties are worth looking forward to.

3. Data: The number of Bitcoin ATMs worldwide has surged 150% in the past two years

On June 17, data from Norwegian financial services company AksjeBloggen showed that the number of Bitcoin ATMs worldwide has surged by 150% over the past two years. Since the launch of the first Bitcoin ATM in 2013, more than 8,000 machines have been installed in more than 75 countries. In the first six months of this year, more than 1,713 Bitcoin ATMs were installed, the vast majority of which were in North America.

[Interpretation] Bitcoin ATM is a hardware device similar to bank ATM, but it is very different from bank ATM. Users can only buy and sell Bitcoin through Bitcoin ATM. Since Bitcoin ATM sells virtual currency, it will not spit out golden Bitcoin even if it is damaged. OKEx Intelligence Bureau believes that the surge in the number of Bitcoin ATMs is a sign of healthy growth in the cryptocurrency industry, and will also help promote the spread of Bitcoin.

4. Search data shows that the next growth point of Bitcoin may be in Africa and South America

According to Cointelegraph on June 16, an interactive map showing the global interest in cryptocurrencies shows that Bitcoin searches are mainly concentrated in African and South American countries. According to the map released by blockchaincenter.net, Bitcoin dominates the search engine market in Africa. Among them, Bitcoin in Kenya accounts for 94.7% of cryptocurrency-related searches, while Nigeria and South Africa account for 89.4% and 89% respectively. The search trend indicates that African countries may become key crypto players in the future. Earlier reports showed that the Speaker of the Nigerian House of Representatives called for the establishment of a substantive legal framework for cryptocurrencies in July 2019.

[Interpretation] In fact, more and more evidence shows that the enthusiasm for Bitcoin in Africa is growing. For example, the Google trend of the keyword "Bitcoin" shows that Nigeria, South Africa and Ghana from Africa are ranked 1st, 4th and 5th in the regional search popularity respectively. The reason for this phenomenon is largely related to the backward local banking infrastructure and inflation. Take Nigeria as an example. The current average exchange rate of the country's sovereign currency Naira against the US dollar is 362.6:1, the lowest level since 1999. In 20 years, the exchange rate of Naira against the US dollar has fallen by about 265%.

3. Mining Dynamics

1. F2Pool will refund 90% of abnormal fees, and 10% will be used as miners’ welfare

According to Gyro Finance, on June 18, F2Pool processed an abnormal transaction of 2310ETH with high transaction fees that was packaged last week. After communicating and negotiating with the original address holder, it refunded 90% of the transaction fee and used the remaining 10% for a one-week ETH zero-fee mining activity.

[Interpretation] F2Pool is the third largest mining pool in Ethereum, currently accounting for 9.2% of the total computing power of the Ethereum network. In the blockchain world, once a transaction is sent and confirmed, the possibility of withdrawal is almost non-existent unless a 51% attack occurs on the network. Therefore, once an error occurs during the transfer, we can only expect the mining pool or the recipient to voluntarily return it. Thumbs up for F2Pool

2. Wu talks about blockchain: Yunnan Dehong sends inspection team to inspect direct-supply power mines, some of which are seeking to sell

According to Wu Blockchain, on June 16, Dehong Prefecture issued a notice on "carrying out inspections on illegal private big data projects in the prefecture". The inspection period is from June 17 to 19, focusing on illegal private big data projects. It was previously reported that Yingjiang County, Yunnan Province, carried out inspections on illegal big data projects and 16 mining equipment in the county have been dismantled. Mining professionals reported that the mining industry in Dehong Prefecture is "in mourning" and some mines are seeking to be sold.

In addition, due to power restrictions and safety rectification, a large number of mining machines were disconnected from the evening of June 14. On June 15, more than 40,000 devices were disconnected in Sichuan and Yunnan. Data shows that on June 17, the total computing power of Bitcoin was about 103E/s, the lowest point in recent times. Currently, the total computing power of Bitcoin is about 111.80E/s.

[Interpretation] This year's flood season has brought many hardships to miners. First, before the flood season came, miners encountered the "hydropower consumption" policy in Sichuan Province. After that, the flood season was supposed to arrive in early May, but it encountered a long-term drought without rain. Recently, Yunnan, Guizhou and Sichuan have encountered continuous heavy rains. All of these have had an adverse impact on the normal work of miners, so that the Bitcoin network computing power has fluctuated violently recently, from 125E in early June to about 103E/s on June 17.

3. Ebang International updates its prospectus but does not announce the listing date

According to Leidi.com, Bitcoin mining machine company Ebang International updated its prospectus today, planning to issue 19,323,600 shares, with an issue price range of US$4.5 to US$6.5, and a fundraising scale of US$86.94 million to US$125 million. Ebang International's stock code is "EBON" and it will be listed on the Nasdaq in the United States. However, Ebang International has not yet announced the specific listing time. Ebang International's revenue in 2019 was US$109 million, a 66% decrease from US$319 million in 2018; Ebang International lost US$41.07 million in 2019, a larger net loss than the same period last year.

[Interpretation] As one of the three major mining machine giants in the 16nm era, Ebang International has more than 10 mining machine models. However, during the critical period of the transition of mining machine chips from 16nm to 7nm, when Bitmain, Canaan Creative and Shenma Mining Machine were advancing in parallel, Ebang International did not seem to keep up. In fact, during the last mining machine upgrade, Bitmain dominated the market with the Ant S9 mining machine. If Ebang International can successfully go public, it may be able to rely on the stock market to transfuse blood and fight a turnaround in this critical period of mining reform.

4. Data: Miners reduced Bitcoin supply and began hoarding in the past week

According to CryptoNews on June 16, miners still sold more Bitcoin than they produced in the past 12 weeks, but this trend has changed in the past few weeks. ByteTree data shows that in the past week, they mined 7,150 BTC and sold 5,821, retaining 1,329 BTC. ByteTree CEO James Bennet said that miners usually build inventory when the market is weak and then turn to strong sales. As prices recover, miners may start selling inventory again.

[Interpretation] The reduction in miners' selling will accelerate the breakdown of the supply and demand balance, which will be conducive to the market's positive development. However, under the influence of the epidemic, investors are likely to be conservative. As a high-risk asset, will Bitcoin be recognized by the market in the short term?

4. Industry Voice

1. Vitalik Buterin disagrees with the S2F model, and the theory that "halving leads to an increase in BTC prices" cannot be verified

On June 15, Vitalik tweeted that he disagreed with the widely cited S2F (Stock to Flow) model. But he admitted that there was no correlation between the surge in Bitcoin prices and halving, which was not enough to overturn the model.

On the same day, Vitalik also tweeted that the theory that "halving causes Bitcoin prices to rise" is unverifiable: Was the peak before BTC halving? Some people think it "rose in anticipation of halving", while others think that the price increase during and after halving is also due to halving. Vitalik pointed out that Bitcoin's last peak of $20,000 was close to the midpoint between the 2016 and 2020 halvings.

[Interpretation] Within one day, Vitalik Buterin expressed doubts about the two theories of "S2F (Stock to Flow) model" and "halving promotes Bitcoin's rise". The Stock-to-Flow (S2F) model refers to the annual output divided by the number of available Bitcoins. Vitalik Buterin's doubts about S2F are not without basis. As early as 2019, the model predicted that the price of Bitcoin would reach 60,000 US dollars in August 2020. Now there are only two months left in August, and Bitcoin is less than 10,000 US dollars. Obviously, the S2F model has a large error.

In April this year, a well-known Bitcoin whale pointed out in his evaluation of S2F that overly simplified economic pricing models like S2F are very "dangerous" for thousands of traders, who are likely to mistake these theories for correctness due to their close connection with their hype, which will eventually lead to disaster.

Secondly, whether the Bitcoin halving can promote price increases is a topic that people have been discussing. Judging from the two production cuts in 2012 and 2016 and the subsequent super bull market, the production cuts are indeed related to the rise in Bitcoin prices, but whether past experience can be used as a criterion for judging future trends requires more observation.

2. Huang Qifan: Only by combining blockchain and big data can great output value be generated

According to Sohu Intelligence, on June 13, at the China Financial Technology Cloud Summit, Huang Qifan, Vice Chairman of the China Center for International Economic Exchanges, said that under the background of 5G, big data, cloud computing, and blockchain have reached a new level. Last year, there were 18 million big data processing servers under construction and installation in China, and at least 10 million will be added in the next five years. Blockchain is the gene of human beings, the Internet is the nervous system, big data is the blood organ of human beings, and cloud computing is the backbone. Only when these links are combined can we form a whole person and generate great output value.

[Interpretation] Twitter founder Jack Dorsey: "Bitcoin is like poetry". Huang Qifan: "Blockchain is human gene". The importance of Bitcoin and blockchain to human society is self-evident.

3. Investor’s view: DeFi may have a greater impact on Ethereum than ICO

According to Defi Pulse data, the total value of assets locked in the DeFi market (TVL) was close to $1 billion on June 12. Since the market crash caused by the coronavirus pandemic in mid-March caused TVL to fall to $550 million, DeFi has recovered 77% to its current level.

Chris Burniske, partner at venture capital firm Placeholder, recently commented that DeFi will have a far greater impact on Ethereum than ICOs did in 2017 and 2018: "The ICO boom enabled Ethereum to provide one financial service: early capital formation. DeFi will flexibly apply Ethereum's capabilities to provide 'all' financial services." Trader and analyst Cactus said that compared to 2017, the continued growth of ETH 2.0 and DeFi could lead to higher capital flows in the next two years within three months. The ICO boom will be replaced by another channel.

[Interpretation] ICO raised $90 million in 2016, $6.2 billion in 2017, $7.812 billion in 2018, and $300 million in 2019. ICO is considered to be the equity freedom of human society. So, what kind of freedom can Defi, which is mainly based on pledge lending and DEX, create, lending freedom or trading freedom? After all, how big a story can be told to attract the corresponding attention.

5. Blockchain Industry Empowerment

1. Ministry of Agriculture and Rural Affairs: Make full use of modern information means and provide cutting-edge courses such as blockchain

The Ministry of Agriculture and Rural Affairs, the National Development and Reform Commission and other departments recently issued opinions on the in-depth implementation of the action plan for cultivating rural innovation and entrepreneurship leaders. The opinions require that by 2025, the rural innovation and entrepreneurship environment will be significantly improved, the level of innovation and entrepreneurship will be significantly improved, the innovation and entrepreneurship team will continue to grow, and the momentum of rural industrial development will be stronger. Make full use of modern information technology means such as portal websites, remote video, cloud interactive platforms, micro-classrooms, and integrated media to provide flexible and convenient online training, and innovatively offer cutting-edge courses such as product research and development, process transformation, new formats, risk prevention and control, 5G technology, and blockchain.

2. Guangzhou Development Zone launches intellectual property blockchain trading mall

According to Xiaoxiang Morning News, the Guangzhou Development Zone Intellectual Property Financial Service Center was unveiled on June 18. Liu Shi, deputy district head of Guangzhou Huangpu District Government, said that the next step for the development zone will be to launch the "Intellectual Property to Help Science and Technology Enterprises Go Public Project", launch the intellectual property blockchain trading mall and the intellectual property pledge financing risk compensation fund pool, help "knowledge capital" turn into "capital", and provide more protection for the development of small and medium-sized enterprises.

3. The World Economic Forum intends to use blockchain technology to govern corruption in government departments

According to Cointelegraph on June 17, the World Economic Forum (WEF) hopes to use blockchain technology to make corruption in the government public sector more difficult. Ashley Lannquist, head of the WEF blockchain project, said: "Corruption is a 'high potential' space for blockchain because you can really benefit from decentralization. For example, records are difficult to delete or review." WEF is working with the Colombian government to see if blockchain-based transparency can help prevent corruption. A report in charge of Ashley Lannquist pointed out that dark transactions plague the public sectors of many countries, but improving transparency, public accountability and proper documentation is the solution. Blockchain is a solution.

4. Tokyo Electric Power Company will build an additional power trading system based on blockchain

On June 18, Tokyo Electric Power Holdings (Tepco) partnered with major Japanese trading company Itochu Corporation to begin building an additional power trading system based on blockchain. The new system will be popularized in Japan within three years, and blockchain technology will be used to enhance "communication security." The companies plan to cooperate with local governments and start proof of concept in March 2021.

6. Industry Anecdotes

1. Land Rover advertisement marks the birth of Bitcoin as an important historical event

According to Cointelegraph on June 18, in an advertisement with the theme of traveling through history, the video of automobile giant Land Rover marked a series of groundbreaking historical developments. The company's British branch released the advertisement in a tweet on June 17, which cited the "birth of the Bitcoin network in 2009" as an important symbol in history. Land Rover's advertisement once again shows the increase in mainstream Bitcoin awareness.

[Interpretation] The birth of Bitcoin is of course a landmark event. Its appearance brought monetary freedom to human society for the first time. You can finally brag that there is something that belongs only to me.

2. Crypto artist Trevor Jones' work "Satoshi" sold for 27.5 ETH

According to DappReview on June 18, crypto artist Trevor Jones' work "Satoshi" has been bought for 27.5 ETH (about 45,000 RMB). The painting is currently on display in the museum of the virtual world Somnium Space.

[Interpretation] The background of this beautifully crafted painting is a miniature print of a Financial Times newspaper. The right side of the newspaper shows the traditional investment world, and the left side of the newspaper is mainly related to Bitcoin. The Bitcoin symbol appears in two places, and the headline of an article is "Professional inverstors take a punt on the crypto craze". The left and right sides are two opposing worlds, and the huge portrait of Satoshi Nakamoto makes the two worlds merge into one. This painting named "Satoshi" aims to show that it doesn't matter who Satoshi Nakamoto is, but the appearance of Satoshi Nakamoto has opened the door to a new world for us.

3. Israeli software company paid $250,000 in Bitcoin ransom behind regulators’ backs

According to Cointelegraph, on June 14, Israeli software company Sapiens International Corp. NV paid $250,000 in Bitcoin to pay the ransom demanded by hackers without reporting to securities regulators in the United States or Israel, which could shut down the company's system after the attack. It is reported that the attack took place between March and April.

[Interpretation] Sapiens International Corp. NV is a software company listed on NASDAQ and Tel Aviv, providing software solutions for the insurance and financial services industries in North America, Europe, Asia Pacific and South Africa. The company has a total of 900 employees. The ransomware incident occurred during the outbreak of the COVID-19 pandemic, and the company's employees were working remotely. Therefore, the media suspected that hackers took advantage of security vulnerabilities discovered during remote work to launch the attack.

【Event Outlook】

Next week’s crypto industry events calendar