Bitmain’s Troubles Could Hurt the Prices of Bitcoin Cash and Litecoin
Recent reports indicate that Chinese crypto mining giant Bitmain is rapidly scaling down its operations, potentially laying off as much as 85% of its workforce, as it feels the impact of the cryptocurrency market decline.
“There has been some adjustment to our staff this year as we continue to build a long-term, sustainable and scalable business. A part of that is having to really focus on things that are core to that mission and not things that are auxiliary,” a company representative said in a statement.
While the internal problems could spell trouble for the company’s upcoming IPO on the Hong Kong Stock Exchange, the digital currencies on Bitmain’s balance sheet could be most at risk during this period.
As first highlighted by Kyle Samani, the co-founder of Multicoin Capital, both Bitcoin Cash (BCH) and Litecoin (LTC) could suffer from significant bearish pressure as Bitmain begins to unload its more than $200 million worth of holdings.
This is extremely bearish for BCH and LTC
The only reason to make cuts this drastic are because you're about to run out of cash
Meanwhile, they still have 1 BCH and 1M LTC on their balance sheet. Those are going to be liquidated soon to keep the lights on https://t.co/kneSRcK2li
— Kyle Samani (@KyleSamani) December 26, 2018
Based on Bitmain’s leaked IPO filing in March of this year, Bitmain had roughly 931,000 LTC and 1.02 million BCH, worth $27.7 million and $172.7 million, respectively.
If Bitmain needs to liquidate its holdings to continue funding its operations and its upcoming IPO, it would likely result in a flood of supply onto the LTC and BCH markets. This ultimately would add significant downward price pressure on both altcoins, which could mean real trouble in the current risk-off environment.
More: Kyle Sanami’s Tweet
Disclaimer: This article’s author has cryptocurrency holdings that can be tracked here. This article is for informational purposes only and should not be taken as investment advice. Always conduct your own due diligence before making investments.