NVIDIA and AMD Downgraded, and Other Digital Currency Updates
In this week’s digital currency update, we’re going to look at quite a few major events, from how digital currency miners impact Wall Street giants to Coinbase’s new plans to support ERC20 tokens.
Let’s get started.
Bitmain Shakes up NVIDIA and AMD
On Monday, March 26th, digital currencies shook up Wall Street as analysts lowered price targets for two American technology and GPU chip producers, AMD and NVIDIA.
Wall Street firm Susquehanna downgraded AMD, a major American semiconductor firm, from neutral to negative because of rising competition from ASIC producer Bitmain. The new price target for AMD’s shares is $7.50, down from $13.00.
NVIDIA’s price target was adjusted to $200, down from $215. NVIDIA was able to maintain its neutral rating, mainly because the company is also a vital player in the gaming industry, a role analysts expect will help NVIDIA weather any competition.
Over the course of 2017, both AMD and NVIDIA saw increased demand from digital currency miners for their ASIC chips and GPUs.
In the fourth quarter of 2017, AMD's Computing and Graphics division saw revenue increase by 60% because of demand from Bitcoin miners. The demand for NVIDIA's trademark GPU drove the average price per unit up over $300.
But increased competition from China-based Bitmain could potentially cut into NVIDIA’s and AMD’s digital currency profits.
Bitmain will begin shipping an ASIC targeted at mining Ethereum in the second quarter of 2018. This sets up Bitmain to be the biggest ASIC vendor in Asia. It will also be the only company with an ASIC chip capable of mining Ethereum on the market.
Coinbase Announces ERC20 (Ethereum-Based) Token Support
To many investors, this is the biggest news update of the week.
On Monday, March 26th, Coinbase announced that it plans to add ERC20 support to the Coinbase and GDAX platforms.
ERC20 is a technical standard used for Ethereum contracts. ERC20 assets are tokens that have been built on the Ethereum network. Coinbase building out ERC20 support is a big deal for investors trying to guess what token will be next on the digital currency exchange. It indicates that the next token to be hosted on the platform could be a token built on Ethereum.
At this time, Coinbase has made no announcement as to the identity of any new assets.
The company plans to test any new assets on GDAX before adding them to Coinbase. There is also no guarantee that an asset released on GDAX will be released on Coinbase.
You can see Coinbase's full comments in the announcement on its ERC20 token blog.
Twitter Follows Through on Digital Currency Ad Ban
Last week, the world was uncertain as to whether or not Twitter would follow its social media peers and ban digital currency ads on its platform.
This week there is no doubt. Starting March 27th, no more digital currency ads will be allowed on the Twitter platform.
Like Facebook and Google, Twitter banned ads that cover a wide range of content, including initial coin offerings, digital currency wallets, token sales, and digital currency exchanges.
On the Twitter platform, this kind of ban could have some negative side effects for existing digital currency wallet users, who often get in touch with exchanges via Twitter. We will keep you up to date on this situation as it evolves.
CBOE Says the World Could Be Ready for Bitcoin ETP
On March 26th, Coindesk reported that a senior executive for the Cboe Global Markets sent a letter to the U.S. Securities and Exchange Commission. The letter stated that the CBOE believes the market is capable of supporting the launch of a new Bitcoin exchange-traded product (ETP).
The CBOE has backed this belief with data that it collected during the launch of Bitcoin Futures, which took place in December 2018. You can read more about Bitcoin Futures here.
The CBOE's letter came as a response to concerns from the Securities and Exchange Commission about a Bitcoin ETF.
In its letter, the CBOE recognized that the digital currency market is young but "developing quickly." It is this rapid development that makes the market promising for exchange-traded products.
The exact text of the letter reads:
While Cboe shares many of the concerns raised in the Staff Letter, we believe that the vast majority of these concerns can be addressed within the existing framework for commodity-related funds related to valuation, liquidity, custody, arbitrage, and manipulation.
In a follow-up interview with Business Insider, CBOE president Chris Concannon remarked that he thinks markets for government-issued currencies like gold could be even more fragmented than digital currency markets.
Huobi Gets Ready to Make Waves in United States Markets
It's been a big week for China-based digital currency exchange Huobi, which officially registered its U.S.-based operation with the U.S. government as a money services business on March 21st.
Registering as a money service business was a precursor to Huobi's planned rollout of a crypto-to-crypto trading service. The rollout of this service is planned to take place in spring 2018.
This isn't Huobi's first step onto American soil. The digital currency exchange announced in January that it would be opening an office in San Francisco. This office will act as a home base for Huobi's expansion into the American market.
This expansion plan was confirmed on WeChat by Li Lin, the chief executive and founder of the Huobi Group.
This is a major step for Huobi, which is currently one of the biggest digital currency exchanges in China. If the company is successful in infiltrating American markets, it will likely lead to growth down the road.
Li has already stated that Huobi plans to comply with any guidance offered by the U.S. Securities and Exchange Commission when it comes to crypto-to-crypto trading.
That wraps up our digital currency update for the week. Keep an eye on your inbox for next week's update, and follow us on Twitter for more digital currency news updates.