Yesterday morning, Bitcoin Cash was trading around $442. After Bitmain released their IPO prospectus, prices slowly started to climb. During the day, the price rallied 19%, and during the last 24 hours, it’s risen all the way to $570, for a 29% gain.
This price increase was much needed for Bitcoin Cash fans. The cryptocurrency is down 86% from its all-time-high of $,4100 last December.
In the past few weeks, altcoins have seen tremendous gains. DOGE, XRP, and now BCH have broken their downward trend and are giving the bulls some relief. With Bitcoin trading sideways, investor attention is increasingly moving towards the altcoins.
The bear market is by no means over, but this recent altcoin action could signal that the end is near.
Bitmain’s Losing Quarter
BCH’s rally is almost certainly a result of Bitmain’s recent release of their IPO prospectus yesterday (September 26th). The prospectus shows that Bitmain’s IPO is running smoothly, thanks to the $442M in capital raised.
As of today, there is no IPO date announced. Once the IPO is launched, BitMain will have a large warchest of investor capital to spend on growing their business. The IPO funds will provide a boost in growth for Bitmain, which has this year been consistently cutting prices on their products.
The mining giant has been taking losses during the current bear market. In the prospectus, there are two critical pieces of news hinting to their financial status.
First, it’s revealed that Bitmain had Q2 2018 net profits of negative $395M, an unsurprising finding given the significant drop in mining interest and profitability in 2018.
This quarterly performance, however doesn’t mean that Bitmain won’t rebound. Q1 2018 had net profits of $1,137M, which more than offset their Q2 losses.
Second, the prospectus reveals that in 2017 and 2018, Bitmain has spent $493M in research and development for their new chip. Despite all of that spending, Bitmain has failed to release a newer, thinner chip than the one currently used by their rigs.
Furthermore, mining competition has been growing, as Bitmain competitors like BitFury continue to produce newer and stronger products. Investors see the Bitmain IPO as an opportunity for the company to stay on top, and consideringhat Bitmain explicitly supports BCH, any good news for Bitmain is good news for BCH.
The entire Bitmain prospectus can be read here.