Is Bakkt To Blame For Bitcoin’s Current Price Drop?

Is Bakkt To Blame For Bitcoin’s Current Price Drop?

According to a report first published on Bloomberg, analysts working for the US’ giant investment bank JP Morgan are blaming the recent drop in Bitcoin’s price on Bakkt’s recent release of physically-derived Bitcoin futures.  The 20% drop, which was the most significant since November 2018, resulted in the top cryptocurrency trading at around $8,061 on major exchanges.

The report goes on to quote market strategists, such as Nikolaos Panigirtzoglou who stated that this price drop is not necessarily the market reacting badly to this new financial instrument. Instead, Panigirtzoglou suggests that this innovative product will help cryptocurrency come of age, and the markets were simply adapting to this reality.

ICE Performance Disappoints

The futures contracts which payout in Bitcoin issued by Bakkt and the NYSE’s owner, ICE, performed lower than expected during their first week of trading. These low trade volumes are what many in the crypto community believe led to the 20% price drop. Others still blamed the bureaucratic process of getting approval from the U.S. authorities for Bitcoin traded funds.

What Happens Next?

Several analysts in the crypto community mention the Rule of 10 best days which is a bull market narrative that the biggest gains are to be made, on average, over a period of 10 days. Although this rule of thumb has some basis in market analysis, it is difficult to properly gauge the precise reactions of traders and investors.

While buying the futures contracts issued by ICE may not sound appealing to some investors, you can benefit from the proper prediction of the cryptocurrency markets right away, by either shorting or buying the assets. Others, such as BitMEX, allow you to trade Bitcoin options, which give you the opportunity to trade at a specific price and date.

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