Saturday, October 19, 2019

Will Bitcoin be left to lick its wounds after Bakkt’s debacle?

The Takeaway:

Bakkt is being hailed as a revolution for Bitcoin, and while we understand the bullish sentiment, it would be erroneous if we chose to ignore the other side of the coin. In this article, we will analyze bearish BTC price trends with respect to Bakkt's developments and consider historical evidence to ascertain this exchange's drawbacks.

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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. 

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!

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Disclaimer: The article reflects the opinions of the author and is not representative of Chaintimes’ views.
The article does not offer any investment advice. User discretion is advised when investing in or trading with cryptocurrency. Extensive and diligent research should be carried out by the reader before making a decision.

David Hayes
David Hayes
David got to know about bitcoin back in 2012 and has never looked back since, writing and exploring about cryptocurrencies or blockchain technology. He used to write for his own blog before joining ChainTimes as a writer and market research executive in 2017.

1 Comment

  1. The narrow-minded slant presented by the author, a supposed highly knowledgeable source for legitimate Bitcoin-related content, is anything but accurate. It shows how so many “news outlets” (used very loosely in this case) will do whatever they have to do to try to get views, regardless of the accuracy of the data presented. No, Bitcoin does NOT have trust and transparency, from a traditional investor’s point of view. This has been the argument for crypto futures all along. No, Bitcoin did NOT lose value because of the Bakkt announcement, just like it hasn’t lost or gained in any of the previous eight Bakkt announcements. No, offering futures will NOT lead to manipulation or decentralization, any more than futures have led to the same with other market products. Is manipulation possible? Of course – just like it is now in any industry, but never will it be seen in the hundreds of billions of dollars as has been seen with fiat manipulation. The entire construction of Bitcoin, if people would actually learn the subject, prevents it.

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