Hindenburg Research Shorts Chinese Bitcoin Mining Maker; Ebang Continues its Fundraising Spree

Hindenburg Research Shorts Chinese Bitcoin Mining Maker; Ebang Continues its Fundraising Spree

The short-seller argues Ebang makes “extraordinary claims” to be a market leader, which is “backed by no evidence,” resulting in EBON shares dumping.

Short-seller Hindenburg Research is shorting Chinese Bitcoin mining machine producer Ebang International Holdings. This sent the shares of the company (EBON) down 20% to $5.53. EBON shares have lost 63% of their value since the mid-March high.

Ebang made its debut on Nasdaq in June last year, and during this period, it has made three fundraising rounds, one in November and two in February this year alone, raking in $170 million in the last two.

According to Hindenburg, Ebang “claims” to be a leading bitcoin miner maker, but their research “indicates no evidence backs this extraordinary claim.” It further goes on to the point that ever since releasing its final miner in May 2019, its sales have been dwindling to near-zero, “delivering only 6,000 total miners in 1H20.”

The ongoing bull run has fueled a surge in fundraising in the crypto sector, which raised $2.6 billion in just three months, more than the amount raised in the entire last year.

Hindenburg has also been short on another Chinese blockchain company and took short positions in electric vehicle companies, including Nikola Corp, Lordstown Motors, insurer Clover Health, and Kandi Technologies Group Inc in the past year.

According to the firm, its research revealed that instead of using the capital proceeds to develop its business, Ebang has been moving the cash out of the company through “a series of opaque deals with insiders and questionable counterparties.”

Interestingly, this week, Ebang also announced the closing of its previously announced best-efforts follow-on public offering for the sale of 14 million units at a purchase price of US$6.10 per unit, for aggregate gross proceeds of approximately US$85.4 million.

The company intends to use its net proceeds to expand its crypto mining business and for the establishment and operation of the mining farms, crypto exchange, and general corporate purposes.

As we reported, Ebang announced the launch of its cryptocurrency exchange just this week, which Dong Hu, Chairman, and CEO of the company, said, “will not only expand the revenue sources from our cryptocurrency business but also optimize the development of our blockchain industry chain.”

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Author: AnTy

Bitcoin Longs Making an All-Time High, What’s Incoming $5,000 or $10,000?

  • BTC/USD shorts meanwhile nearing lowest levels
  • BitMEX funding rate for Dec on track for the lowest high since March
  • Open interest on CME Bitcoin futures registers an uptick but it’s “negative for potential realized volatility”
  • Bitcoin can go to either $6,000 or test 10,000 level on a 3-month time horizon

Bitcoin is the best performing asset of not only 2019 but of the decade. If you would have invested $1 in Bitcoin in 2010, that would have been worth $100,000 today.

As such it makes sense that Bitcoin must be part of everyone’s portfolio as pointed by Weiss Crypto Ratings,

“Many Wall Street veterans are in agreement. The returns from stocks and bonds will be sluggish over the next decade. Time to add crypto to your savings plans.”

However, this is just starting. BTC/USD is currently trading at $7,069 on extremely low trading volume of just $150 million and is down 65% from its all-time high of $20,000.

And this is why traders are long on the world’s leading cryptocurrency. BTC/USD longs has actually climbed to its all-time high on Bitfinex.

BTCUSD Longs, Source: TradingView

However, crypto trader Josh Rager says people are over-focusing on this chart and giving it way more credit than it actually needs.

Because Bitfinex allows users to trade up to 3.3x leverage, this means BTC price would have to move down to mid to low 5ks minimal in order to liquidate these longs.

But Rager says it is “highly unlikely” that price will nose dive straight to $5k right now. On its way down, there would be several bounces in between.

To get an understanding of the sentiment and interest in the Bitcoin market, we need to pay attention to the BitMEX funding rate and open interest which he says are better indicators.

The Bitcoin funding rate on BitMEX for December is on track for the lowest high since March and in the tightest range since February.

In stark contrast to Bitfinex’s longs, the BTC funding rate on BitMEX is pinned at 0.03%. The number of times the rate has been pinned at 0.03% on a daily basis continues to rise still and in Q4 of 2019 it represented about 40.5% of observed periods, notes analyst Rptr45.

BTC/USD shorts, on the other hand, have reached almost to its lowest level. The has the Bitfinex L/S ratio also at an ATH but as Rptr45 points out without an obvious funding justification which was the case in previous break-outs as well.

BTCUSD Shorts, Source: TradingView

Meanwhile, there has been an uptick in open interest from the last few weeks on CME Bitcoin futures.

As per the Commitment of Traders (CT) report, the OI as of Dec. 12th has been only 116 million and on the lower end of the spectrum.

Digital asset advisory firm BitOoda views this as “negative for potential realized volatility in the short term.”

“Assuming the COT as OI for institutional investors and BitMex OI for retail and high net worth individuals, we could potentially see a set up to buy vol in the new year if the CME/Bakkt OI grows.”

This could help the futures market and further lead the way for realized volatility just like it has in the past. With the retail market already having a lot of exposure, the firm expects Bitcoin to either go back to $6,000 or test the 10,000 level on a 3-month time horizon.

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Author: AnTy