Buy the Rumor, Sell the News?
Bakkt, the cryptocurrency futures platform is all set to land in the crypto world. On 6 September, the network opened gates of its warehouse services for the customers and announced 23 September as the launch day. While social media came flooding with bullish trends towards Bakkt, we must never forget how each coin possesses two sides.
Today our Warehouse opens for customer bitcoin deposits and withdrawals as we prepare for the Bakkt Bitcoin Daily & Monthly Futures, launching September 23
The availability of physical delivery brings more flexibility in managing bitcoin exposure
— Bakkt (@Bakkt) September 6, 2019
Bakkt is packed with enormous innovation. However, these innovations can possibly turn into a hindrance for bitcoin. The cryptocurrency witnessed a sudden drop in its price as soon as Bakkt announced its service’s launch.
Will Bakkt be a Revolution or a Setback?
The launch of Bakkt though assumed to be a revolution in the crypto industry, yet subsists with some potential downsides. Where some investors believe in the more, the merrier, another handful apparently do not favor the same. They fear the high-risk crypto derivatives and worry that it may get worse.
Wall Street veteran alludes Bakkt to a double-edged sword.
ICE’s announcement of a regulated, physical Bitcoin futures contract and warehouse certainly paves a path for significant institutional investments. According to Caitlin Long, Wall Street veteran, the only shot Wall Street has at controlling the virtual coins is by expanding and increasing their influence through leverage by ascending the claims to the coins.
Manipulations on the move to dip bitcoin prices?
The big Wall Street Institutions could use their gigantic dominion and capital to manipulate or exaggerate the bitcoin prices, as well as other cryptocurrencies by dicing big games where small investors can lose.
Manipulations in future contracts pose a severe threat to the crypto prices and counteract the sole vision of digital coins.
Will market scarcity still increase the price? Think otherwise.
Bitcoin holds an enforced scarcity; this is one of the major boosts to its value. If Wall Street enters to originate claims to the crypto coin, without actual bitcoin backing, it can, to some degree, counterbalance the limitation of BTC mining. Besides this, a high level of leverage-based financialization can turn the community securing the bitcoin network towards a different currency.
Bakkt hurting the essence of Bitcoin.
In addition, Bakkt possesses the ability to increase the institutionalization of Bitcoin, and people fear this might be detrimental to its decentralization.
Also, the statement by the ICE CEO Jeffrey Sprecher, following the announcement of Bakkt, did not go unnoticed. Sprecher talked about bringing trust and transparency to Bitcoin. Yes! He certainly did. Where bitcoin already attains both, such a comment from the parent company of Bakkt failed to please the audience.
Bakkt announced a price dip in 2018, will history repeat itself?
The announcement of Bakkt’s emergence swayed the wave of mixed-emotions in the crypto world. Although the cryptocurrency fanatics see an opportunity even in the times of price crash, the factors leading to such a slide must be considered. Bakkt, in 2018, was responsible for a slight decline in bitcoin’s price even though it was just its launch declaration.
History of Futures reflects a detrimental impact.
Bitcoin futures contracts are no surprise to the crypto industry. In 2017, the Chicago Mercantile Exchange Group (CME) and the Cboe Global Markets launched the same. Although the bitcoin price experienced hikes, yet, as speculated, the prices plunged in no time. Was it the manipulations of the institutions? To some extent, it was assumed that significant institutional figures played to crush the cost to obtain the contracts at a lower price. This, in turn, benefited them in acquiring bitcoins at a cheaper rate.
Further, as we dig deeper, the gold futures contract treasure that we find buried in the economic world is actually an old case of losses. The futures contract of this precious metal were introduced in 1974 but failed to play a heroic role. Gold dipped by almost 50% and could not rise to its all-time high price for the next three and a half year.
Therefore, looking back certainly paints a sad picture. The futures contract, either did not or negatively influenced the asset valuations.
What do you think? Will the world inside Bakkt’s doors be a happy place for crypto? Comment below.
Bakkt is ready to inaugurate, and we must hope for the best!