Since April, it seems Bitcoin has been ripping the market dominance apart. Altcoins that have historically posted greater gains than Bitcoin are struggling to even maintain relevance in the current market which can lead investors to think: buy only Bitcoin. The largest mistake you can make as an investor is to follow the herd. Therefore, lets break down the upcoming Bakkt launch for Bitcoin, how the market might respond, and compare this to the 2017 bull market.
Nothing should be considered investment or financial advice. Enjoy the ride.
Bakkt Launch Information
By now, everyone has heard that the long awaited Bitcoin Futures platform Bakkt has received regulatory approval from the Commodity Futures Trading Commission (CFTC) and New York State Department of Financial Services (NYSDFS) for a launch on September 23. The Bitcoin futures will be exchanged on ICE futures U.S. and cleared on the ICE Clear U.S., and Bakkt will use the Bakkt Trust company as a custodial solution partnered with the Bakkt Warehouse which is a custody services for physically delivered Bitcoin futures.
Currently, Bakkt is accepting user testing for a full launch to come on the date provided above. What is not clear, is the amount of institutional money that will be flowing into the platform and utilizing the Bitcoin settled futures. Recently, the CEO of Coinbase, Brian Armstrong, tweeted that Coinbase was seeing 200 – 400 million enter the market weekly from institutions. These numbers are impressive, but really they are only a drop in the hat considering that is not taking into account the amount flowing out of Coinbase weekly, or the amount simply being used for transactional purposes. Plus this is barely even a fraction of the amount of money moving through the Forex market daily which is in the trillions.
Market Response To Bakkt Launch
With Bakkt finally launching, there is an overwhelming confidence in the market that Bitcoin will surge to greater heights than ever before. Additionally, there is a common belief now that this is the last time Bitcoin will ever dip below the psychological $10,000 levels. It is very dangerous to be over confident, and especially dangerous when it is a volatile market like crypto.
As much as I would love too see Bitcoin shoot for the moon, it is not quite realistic yet. The market still lacks a deep understanding and appreciation of Bitcoin in terms of usability. Personally, I think this is just the setup to the rocket. This might not propel Bitcoin to new highs and make new millennial millionaires, but it will get the institution’s feet wet for the next crypto market bull run and provide substantial liquidity later.
Sadly, this means more often then not, Bitcoin could dip back to the $7,000 and $8,000 levels easily and still comfortably give investors a buy in period for another year or so. Alternatively, the market could steadily climb, but it will be slow similar to the start of 2017 where Bitcoin started at $1,000, then grew to $2,000, then grew to $4,000, and then a year later finally spiked before descending rapidly.
2017 Crypto Bull Market
If we take a straight comparison to 2017, there are several important differences to take note of. I am going to list out the vital differences for simplicity, describe why they are important to remember, and what the implications are.
In 2017, there was a huge surge in ICO and Token Sales. This new way to essentially raise money all over the world instantly, clearly had a huge impact on the market. billions of dollars flooded the market suddenly and inflated the price of Ethereum, which in turn flushed into the rest of the market. Today, we have initial exchange offerings, but the investor pool is limited and there is not nearly as many as the 2017 ICO market. Combine this with the growing knowledge level of the market, these type of pump scams will probably not lead to another bull run, but also that means something else will need to step in its place to hype the market up.
Tether printed massive amounts of USDT
The largest stable coin on the market, USDT, was pumped into the market by its parent exchange Bitfinex. Although they say every USDT is backed by either fiat, crypto, or some form of asset, this clearly had a huge impact. With the lack of volume in the 2017 market, the flood of Tether had a greater impact than it would today. Likewise to the ICO season scenario, USDT will not be able to have the same effect in the future as it did in the past.
Lack Of Volume
This served to hyper inflate Bitcoin’s price nearly instantly. Once Bitcoin reached critical levels over $12,000 there was hardly any cap or sell orders to stop the price from shooting up even further. Without sell pressure, the price of Bitcoin seemed to jump thousands of dollars in only a few hours with little to no resistance. This was further enabled by the rapid manipulation spread across the market on exchanges during the pump. Again, with the broadening of the market, this will become harder to duplicate, but could still potentially happen if Bitcoin breaks into an exponential pattern.
Where Are The Altcoins
In addition to the lack of clarity on the Bakkt launch for the Bitcoin price, I do not believe the “bull market” will fully come into effect until the altcoins reach profitable levels again. There is not enough investor confidence, and most bag holders are not budging at this point. Simply for the fact that, what more do they have to lose? Until the altcoins surge, there is a huge pool of investors just sitting stagnant without large amounts of additional wealth to shift in and out of Bitcoin. Therefore, until the alts recover substantially and provide this additional wealth and play money, the market is less likely to shoot to the moon.
Most wealthy people will say, they make the most money going against the tide of the market. For instance, if everyone thinks AI or Voice Technology is just a fad, then some patient large hands are going to look past the skeptics and buy cheap stocks and invest in young companies because they know, Fads turn into world moving markets. If you want more perspective on this, go look up Gary Vee and watch some of his talks on investing in the “fads”.
For everything else, there’s Mastercoin. Just kidding, everyone knows Trumpcoin is a great investment. (clearly joking again please do not buy it)