On September 23rd, Bakkt finally opened for business after a year-long waiting period. While we weren’t exactly waiting with bated breath for the whole year, the hype around the event was still big. And the crypto community was definitely curious about how the launch of Bitcoin futures would impact Bitcoin’s price.
So here we are, a few days later: instead of skyrocketing, Bitcoin fell way below $10k, losing more than $2,000 in value.
On top of that, scammers wasted little time and immediately came up with ‘Bakkt official BTC and ETH giveaway’, in hopes of raising some crypto to verify the contestant’s addresses.
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But what really happened to Bitcoin’s price after Bakkt’s launch? Are the two events connected or is it too early to draw conclusions?
Before we get to the bottom of it, let’s take a closer look at the problem and start from the beginning.
What is Bakkt?
In 2018, Intercontinental Exchange (ICE) announced that it would launch a Bitcoin futures exchange. The idea of Bitcoin futures was not particularly new as the Chicago Mercantile Exchange had introduced a similar product back in December 2017. With only one exception: Bakkt customers would have physical storage of Bitcoin and can bet on the price in BTC as well.
Apart from that, Bakkt has partnered with a number of established companies such as Microsoft and Starbucks and several major investment organizations.
The ultimate goal of Bakkt is to create a network that will make crypto universally accepted, from small businesses to pension funds.
And that’s a big commitment in terms of mass adoption.
Why do Bakkt and Bitcoin futures matter?
ICE owns the New York Stock Exchange (NYSE) and since Bakkt is their creation, the Bitcoin futures initiative is an officially regulated business. Moreover, two of the most strict US regulators, CTFC and NYSDFS, are vouching for it. New York, despite being the heart and soul of the world’s tech and finance, is not too friendly to the crypto space. Even Coinbase and Binance are not allowed to operate in the state. So, basically, Bakkt is a pioneer of sorts.
The unregulated nature of Bitcoin and cryptocurrency, in general, has been driving off institutional investors and attracting mostly risk-takers and revolutionaries. But increasing the total market cap and thus, overall adoption, begs new investors, and a safer less volatile and authority-backed environment might help with that.
Why Did the Bitcoin Price Crashed?
To be completely honest, the Bitcoin price drop was not particularly a bombshell. When CME launched its Bitcoin futures two years ago, Bitcoin lost the same $2,000 in value. But we have to admit that CME volumes differed drastically. Alex Kruger, trader and analyst, compared the numbers and counted a 75x difference.
“The disappointing BAKKT opening signals to the crypto community that institutions are less ready to invest in BTC at scale than was supposed, which means the price was probably too high and due for a correction. What we’ve just seen is short sellers and momentum traders piling on to make things worse, and now here we are back at support.”
There is no need to panic or doubt though, it’s not like it’s the first time Bitcoin is having its way. And if you are panicing, read our advice on what to do when the Bitcoin price drops.
The Bottom Line
In the crypto space, there is a popular belief: when the scammers come out, there is a good time coming!
All jokes aside, the Bakkt launch is still an important event for the crypto community even if you’re not interested in dealing with Bitcoin futures whatsoever.
Two of the toughest regulators giving Bakkt a green light and thus acknowledging Bitcoin as an asset could be enough to bring in new investors. But just like with any other more or less significant crypto-related event, it may have a tiny effect in the greater picture and would be just another brick in the wall. The road to mainstream adoption is long and challenging and we’re not even halfway there yet.
The bitcoin price drop is good news though: a perfect entry point combined with our Bitcoin giveaway will leave everyone sitting pretty.