Bitcoin

In the first half of 2023, Bitcoin’s classic “buy and hold” strategy outperformed most crypto funds by a significant margin, according to a report by Switzerland-based investment advisor 21e6 Capital AG. Despite crypto funds historically outperforming Bitcoin during bull runs, they struggled this year due to cautious approaches and high cash reserves stemming from market challenges in late 2022.

H1 2023 Performance:

While crypto funds achieved an average return of 15.2%, Bitcoin witnessed gains of approximately 84% during H1 2023. 21e6 Capital AG’s head of marketing, Maximilian Bruckner, acknowledged that in previous bull markets, crypto funds had often outperformed Bitcoin, but this year’s conditions posed unique challenges.

Crypto funds on average generated 15.2% return in the first half of 2023 lol pic.twitter.com/vb8pwYfiX9

— Alex Krüger (@krugermacro) August 5, 2023

Impact of Cash Reserves:

After the crypto market upheaval in 2022, many funds became risk-averse, accumulating significant cash buffers. This cautious stance led to missing out on the substantial BTC price rally in H1 2023. The report highlighted that funds with substantial cash positions tend to underperform Bitcoin during bullish periods unless their assets outperform Bitcoin significantly.

Underperformance and Challenges:

The challenging environment in 2023 affected both major altcoins and crypto funds, making it tough for the latter to outperform Bitcoin. Funds with heavy exposure to altcoins, futures, or those heavily reliant on momentum signals saw relatively weaker performance.

The report emphasized monitoring leading futures providers and the funding rates in crypto futures markets. Additionally, the ability of quantitative funds to capture market trends would be a focal point for observation in the future.

Investor Sentiment:

While the report indicated a slight improvement in investor sentiment during H1 2023, a complete recovery was yet to occur. Some funds might consider reinvesting more cash into the crypto sector, but current data on inflows and outflows suggested caution still prevailed.

In summary, BTC’s “hodlers” were the winners in H1 2023, outperforming crypto funds by 69%. The funds’ underwhelming performance was attributed to their risk-averse strategies and substantial cash holdings, missing out on the impressive BTC price rally. Despite positive results, funds still struggled to beat Bitcoin, especially those with significant exposure to altcoins or futures. The report highlighted the importance of monitoring futures providers and funding rates for future success. While investor sentiment showed signs of improvement, a full recovery was yet to be seen.

Publicly-listed Bitcoin mining companies are facing a challenge to remain profitable as the upcoming halving event threatens to cut their revenue in half. While Bitcoin’s price predictions remain bullish, miners may need the cryptocurrency to reach six figures to sustain their current valuations.

Bitcoin Halving Impact on Miners

The Bitcoin halving, which occurs approximately every four years, is a significant event for miners as it reduces block rewards by 50%. This cut in revenue could pose serious headwinds for mining companies, including popular miners like Riot Platforms, Inc. (RIOT), despite their plans to expand mining capacity.

Bitcoin miners have had a banger of a year.

RIOT is up 457%
MARA is up 421%
BITF is up 337%
CLSK is up 246%

Both Bitcoin and Nvidia rose by less than public miners this year — 80% and 222% respectively.

The best way to get leveraged/high-beta exposure to BTC.

h/t @zackvoell pic.twitter.com/xTsJqikh0L

— Joe Consorti ⚡ (@JoeConsorti) July 18, 2023

Bitcoin mining stocks have seen an impressive surge this year, outperforming BTC itself. However, with potentially overbought conditions and increased BTC sent to exchanges, momentum might decline, making it essential for miners to rely on a higher Bitcoin price.

The Necessity of Six-Figure Bitcoin

According to a report by “Made Easy – Finance,” Bitcoin’s price may need to exceed $98,000 for miners like RIOT to justify their current valuations after the halving. Without a substantial increase in Bitcoin’s value, the mining sector may suffer.

Risks of Holding Mining Stocks

Given the uncertainty in underlying fundamentals and the potential for current valuations not factoring in the halving, “hodling” Bitcoin mining stocks is deemed extremely risky.

Various reports suggest optimistic forecasts for Bitcoin’s future price. Matrixport predicts a year-end target of $45,000 and an ambitious end-of-2024 target of $125,000, pointing to historical signals indicating the start of new bull markets.

Bitcoin may reach $120,000 by the end of 2024, Standard Chartered forecasts, as an expected improvement in crypto miners' fortunes allows them to hold on to more of the tokens https://t.co/Z9z0BbKCqS

— Bloomberg Crypto (@crypto) July 11, 2023

While Bitcoin’s price predictions are optimistic, publicly-listed Bitcoin mining companies may need the cryptocurrency’s value to exceed $98,000 by the halving to sustain profitability and justify their current valuations. As the market remains volatile, investors should consider potential risks when holding mining stocks.

Exchange Announces Suspension

 The suspension is set to take effect from 16:00:00 on August 15, 2023 (UTC) until further notice. While the exchange cited its evolving business strategy as the reason behind the decision, it did not provide further details.

Recommendations for Miners

To ensure uninterrupted earnings for users involved in cryptocurrency mining, KuCoin has recommended transitioning BTC and LTC miners to alternative mining pools before the specified suspension date. Users are advised to act promptly to avoid disruptions to their mining operations.

Preservation of Mining Records

As part of the announcement, KuCoin also issued a warning to users to back up and preserve their mining records and related data before August 27. Preserving this information is essential for miners to maintain continuity and monitor their mining activities effectively.

Current Hash Rates

At present, KuCoin’s Bitcoin and Litecoin mining pools have hash rates of 9.08 exahash per second (EH/s) and 3.90 terrahash per second (TH/s), respectively. Comparatively, the entire Bitcoin network currently operates at a hash rate of 349.19 EH/s, while the Litecoin network operates at 792.16 TH/s.

Denial of Layoff Plans

This announcement comes amid earlier reports suggesting that KuCoin was planning to lay off 30% of its workforce. However, the exchange’s CEO, Johnny Lyu, denied such claims, asserting that KuCoin is operating smoothly and experiencing growth in users and new listings. The exchange has recently implemented mandatory Know Your Customer (KYC) requirements for its users, with over 20 million registered accounts.

SCOOP: Following Binance, cryptocurrency exchange KuCoin will lay off 30% of its workforce. Confirmed by more than three internal employees. KuCoin has nearly 1,000 employees. The main reason is that the strict KYC policy was launched after being sued by the United States, which…

— Wu Blockchain (@WuBlockchain) July 25, 2023