Chinese Bitcoin pioneer Jihan Wu has been off the maps for months now.
Since late-2018, which was when the so-called “hash war” was taking place between two camps in the Bitcoin Cash community, Wu, who was the chief executive of crypto hardware manufacturer Bitmain, has been entirely silent on Twitter and hasn’t shown his face at any industry events.
While some suggested that he threw in the towel, catalyzed to quit due to the 80% correction in the Bitcoin price, new reports say that Wu is coming back. And he is coming back with something up his sleeve.
Meet Matrix, a Crypto OTC Play
Per a report from The Block, which cited sources close to the cryptocurrency heavyweight, Wu’s startup will be launching in the coming 30 days. Matrix will purportedly be a multi-faceted crypto services business, which will focus on asset management, custody, and over-the-counter (OTC) liquidity provision for its institution-grade clients.
This confirms a March report from CoinDesk and Primitive’s Dovey Wan, who both stated that Matrix will be a services provider for crypto firms and those looking to delve into this space.
According to one source, Bitmain, in an odd twist of fate, will be Matrix’s first notable client. What’s odd about this is that Wu was rumored to have left Bitmain, of which he still owns a purported 20.5% stake in, on bad terms, with some stating on Twitter that he and his compatriots on the firm’s C-suite disagreed on certain subject matters.
Regardless, The Block’s sources state that Matrix will likely provide Bitmain with custodial and lending services, presumably for the mining firm’s large (and ever-expanding) Bitcoin stash and its expansion plans.
One familiar with the matter even stated that Matrix, with Bitmain in tow, may even become the “biggest OTC desk and asset-manager overnight,” noting that the desk of Wu’s new company should have access to liquidity not seen before in the industry.
Further contradicting the reports of a bureaucratic tussle, a source said, “relations are great between the two.” Aside from Bitmain, it is unclear if Matrix has secured any relationships with other firms, yet it is believed that the company is in active discussion with “prospective clients globally”.
Likely to be a Successful Venture
Data suggests that Matrix may see widespread success with its OTC offering, which gives an opportunity for miners to cash out and institutions to cash in without causing wanton volatility in the underlying cryptocurrency market.
Reported by The Trade last week, upwards of 60% of all cryptocurrency trades made in 2018 were related to the OTC market, which is a figure that executives like Binance’s Changpeng Zhao have cited before. With so much of the Bitcoin market being predicated on back-room deals, Matrix’s entree into institutional services will likely gain traction and mature the market greatly.
What’s more, Matrix will likely be focusing its sights on China, which is where it has the largest sphere of influence due to its Bitmain roots. Qiao Wang of Messari explains that while regulated cryptocurrency trading is banned in China, he believes that the “largest Bitcoin market in the world is OTC in China”. With there being few respected players as it stands, the introduction of Matrix is unlikely to go unnoticed.
I have a growing belief that the largest Bitcoin market in the world is OTC in China.
This market is incredibly opaque, and that's what makes analysis of relationships between macro and Bitcoin so difficult.
Highly recommend this Bitmex piece on China: https://t.co/HlJqlofX2z
— Qiao Wang (@QWQiao) May 27, 2019
Matrix’s sudden launch comes as Bitcoin mining, Bitmain’s primary source of revenue, has seen a massive resurgence. As spotted by researcher Kevin Rooke, the mining difficulty of the Bitcoin network has recently hit an all-time high.
Simultaneously, the blockchain’s hash rate has begun to near previous all-time highs, signaling that miners’ confidence is starting to return. This will likely bode well for Wu’s venture, which is seemingly partnered with Bitmain as aforementioned.
Bitcoin mining difficulty has just hit an all-time high.
The network is stronger than ever.
— Kevin Rooke (@kerooke) May 31, 2019