How the launch of Bakkt affected the cryptocurrency market
Bakkt launched supplying bitcoin futures, but the demand for its services so far leaves much to be desired. Moreover, the Bitcoin exchange rate collapse after the launch of the derivative instead of showing the growth.
The launch of the delivered BTC futures from the subsidiary Intercontinental Exchange Bakkt is a new chapter in the history of the cryptocurrency market. Bitcoin was finally able to reach Wall Street brokers. But large investors have not shown much interest.
Does Wall Street Need Bitcoin?
Many traders and investors have been betting on the launch of regulated secure crypto derivatives - deliverable BTC futures and Bitcoin ETFs. It was expected that the inflow of even insignificant capital from large investment funds will provoke unprecedented demand in the BTC spot market and the price of the first cryptocurrency will update the highs of 2017.
In the end, it turned out that the daily trading volume of bitcoin futures on the BitMEX crypto-derivative platform was even greater than that of Bakkt. At Arthur Hayes's platform, it amounted to 270,000 BTC ($ 2.6 billion), while the institutional platform concluded contracts for only 71 BTC ($690,000).
In addition, instead of the crazy growth of bitcoin, we saw the fall in asset’s price from $9600 to $8400.
Why BTC collapsed after the launch of Bakkt
According to Agema hedge fund trader Igor Lem, Bakkt currently has no influence on the cryptocurrency market, there are simply more BTC sellers than buyers.
“This is an imbalance of supply and demand. There are more miners who urgently need to sell - than random newcomers who urgently need to buy,” explains the specialist.
As for the expectation of new Bitcoin record highs, according to the trader, if the crowd influence is significant, then it should be justified almost instantly in the change of the price. If the expectation doesn’t affect the price, then the trend is doubtful and not supported by real money and actions, which becomes the opinion of not a majority, but a minority.
“Obviously, Bakkt is not interesting for large players. And the amount of attention to their product was caused by a lot of money, that was spent on the marketing promotion of the platform (apparently not entirely successful). Large players can easily open many options contracts on Deribit or futures contracts on CME, ” says Igor Lem.
However, Bakkt operations director Adam White stays optimistic. According to him, in addition to large investors, retail customers will also have access to the platform in the future. And maybe even that fact will affect the cryptocurrency market.
What to expect in the future
As for BTC price predictions, it is likely that the institutionals play long and enter the market in the coming months on more favourable conditions.
Professional trader Maxim Hamaha is confident that the market was artificially kept at around $9,000. CNBC has constantly talked about the Libra cryptocurrency project and the upcoming launch of Bakkt, promising a bitcoin price of $15,000, and more than $20,000 by the end of the year. Therefore, people were sure that if you enter at $10,000, then within 4 months you can make 50-150% of the profit.
In the end, those who bought in advance at $3,000, dumped their volumes. Now, supposedly, a change in trend has occurred and no one is holding the market. And the task of the whales is to “squeeze” those who came in at above $9000, but to do that you need to lower the price to $6000.
“The task of the whales is to make people believe that bitcoin will fall below $2000 and as soon as they believe in that, then the market will see the bottom. Perhaps this will happen at around $4000 - $6000, as such, in the near future, another “crypto winter" is expected. After the market falls, institutionals will come. And on the next bull run there will be unreal profits,” explains Maxim Hamah.
Thus, although large investors have gained access to bitcoin, the demand for it remains small. It’s hard to say whether Bakkt will pay back the costs of creating infrastructure for institutionals, but that’s definitely a new milestone in the development of the bitcoin industry. Now the market remains manipulative and whale movements set the main trends and it is possible that we will see a repetition of “crypto winter”.