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Over the past 12 hours, the price of Bitcoin, which was dangerously close to breaching the $4,000 support level, surged from $4,050 to $4,560 by more than 12 percent.
On Coinbase and major fiat-to-crypto exchanges like Bitstamp and Kraken, Bitcoin dropped to as low as $4,030 for a brief period of time and recovered to $4,200 almost immediately after. Eventually, BTC rebounded to $4,500, showing some resistance in the low $4,000 region.
Bakkt Controversy
On November 20, ICE, the parent company of the New York Stock Exchange, released a statement regarding the delay of the Bakkt Bitcoin futures market launch from December 12 to January 24, 2019.
The official document shared by ICE stated that the institution needs more time to handle the onboarding of customers and clearing members before opening the futures market.
“ICE Futures U.S., Inc. will list the new Bakkt Bitcoin (USD) Daily Futures Contract for trading on trade date Thursday, January 24, 2019, subject to regulatory approval,” an excerpt from the announcement read. “The new listing timeframe will provide additional time for customer and clearing member onboarding prior to the start of trading and warehousing of the new contract.”
Following the release of the announcement, rumors emerged that the Bakkt delay caused the price of BTC to drop and the information was leaked to a handful of large-scale investors in the cryptocurrency market.
Some argued, given that Bakkt acknowledged growing demand for its futures product, that investors bought into BTC as it dropped to the low region of $4,000 and it was all a plan to accumulate more of the dominant cryptocurrency.
However, there exists no evidence to support the theory and the significance of the launch of the Bakkt futures market still remains in question. The impact of the Bitcoin futures market operated by Bakkt on the cryptocurrency sector is an uncertainty and the magnitude of the demand for Bakkt from investors in the US market, who are the target client base of the institution is unclear.
Generally, the sentiment around the Bakkt delay has been positive, even from Bakkt itself. Hence, it is premature to conclude that Bakkt somehow influenced the price of BTC in such a significant way for the asset to fall 12 to 15 percent in value.
“Given the volume of interest in Bakkt and work required to get all of the pieces in place, we will now be targeting January 24, 2019, for our launch to ensure that our participants are ready to trade on Day 1,” the Bakkt team said.
Not as Bad of a Drop
Peter Brandt, a renowned technical analyst and trader, published a table outlining the performance of BTC in past major corrections.
Since its all-time high, BTC is down less than 80 percent, considering its fall to $4,000. Even if BTC finds a bottom at $4,000, it is only the fifth biggest correction in the history of the cryptocurrency market.
There exists a possibility for BTC to test the $4,000 support level in the weeks to come, but a further drop below $4,000 can only occur if the sell volume of the asset intensifies to a point in which the volume of the asset hits $8 to $9 billion.
Featured image from Shutterstock.
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