Forbes reports Bakkt not the issue – BTC fall due to mainstream coverage

New BIS report cites “internalization” by large banks for 7% volume drop

Bitcoin enthusiasts, investors, and observers have still not gotten over how severely Bitcoin fell from grace, after the Bakkt crypto futures exchange opened for business. The blame-game has continued for weeks. The S&P 500 Index also took a tumble at the same time, as trade talks worsened and recession fears ramped up, but none of these fundamental events seemed to carry any weight with the Bitcoin faithful. It had to be Bakkt, from their perspective, but analysts are still searching for acceptable answers.

First – The Word on Bakkt

The folks at Forbes had initially followed the accepted storyline that Bitcoin had stumbled after Bakkt had done the same badly:

Bakkt, an Intercontinental Exchange-backed bitcoin and crypto platform, was unveiled last year and boasted computing giant Microsoft and coffee chain Starbucks among its partners–promising to open up bitcoin to institutional investors and bring crypto spending to the high street.

They followed with the quasi-obituary that claimed that Bakkt had raised expectations too high and so far had not delivered:

Bakkt’s much-hyped “physical” bitcoin futures, meaning that traders and investors are not able to sell more bitcoin than they actually have, were expected to herald a sea-change for bitcoin markets, though they have so far failed to trigger any meaningful change.

Now, in an abrupt change, Forbes is telegraphing that Bakkt is a brewing success story, publishing this chart as evidence of their change in attitude:

Investment experts, who were well acquainted with how the futures industry operates, i.e., the ones that “physically settle”, as does Bitcoin, had counseled Bitcoin advocates that it would take time for Bakkt to get going due to the several changes that had to occur in back offices before any trader could literally place an order. Somehow this advice fell by the wayside on the way to the trading floor, but now the reality is beginning to support these words that patience is called for. In one day Bakkt BTC futures jumped nearly 800%.

Bakkt management quickly took to Twitter:

As we continue to build the Bakkt bitcoin futures contract, we reached a new trading record of 212 contracts traded [on Wednesday]. With [Wednesday’s] close, Bakkt set a new daily record of $1.93 million, bringing its total number of outstanding contracts to 1197 as of October 9, worth $10.2 million.

In case you are curious, Thursday’s action on the next day fell back to 109 contracts traded. Tom Lee. Co-founder of Fundstrat, a data analytics firm, noted:

Watch Bakkt volumes. It is nearly a pure proxy for institutional demand for bitcoin.

Second – If not Bakkt, then what?

Yes, Bakkt had hyped expectations so high that there had to be an impact when it failed to impress the madding crowds, but surely there was something else. Billy Bambrough, a Forbes contributor, thinks he may have found another answer. Indexica, a Bitcoin, cryptocurrency, and financial markets research company, has discovered that Bitcoin has “matured” to such an extent that it is now viewed on financial news channels right along side of other major currencies. It has, in a word, hit the financial “mainstream”.

Indexica first shared their thoughts in an interview with Bloomberg, using the term “quotability”, as a way of describing how BTC is often discussed on news channels, where traders traditionally get their market information. Zak Selbert, chief executive of Indexica, told Bloomberg:

Now that bitcoin is a big kid, anything can make it move, just like anything can make gold or a G-10 currency move. Bitcoin is part of the financial landscape in a very intertwined and mature way.

Consequently, the market boosted Bitcoin immediately after the Fed announced its plans to expand its balance sheet and with it, the money supply, last week.

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