Bitcoin has dominated the cryptomarket since April. Of course BTC has always done that, but bitcoin seems to get a better grip on the market every day. Altcoins that could be well earned in the past are struggling to remain relevant in the market. It seems like everyone is putting their money into bitcoin. But is it a good idea to follow the herd?
And what about Bakkt, can new institutional money lead to a bull run like in 2017?
Bakkt starts September 23
It was big news last weekend, the long-awaited bitcoin futures platform Bakkt has received approval from the Commodity Futures Trading Commission (CFTC) and the New York State Department of Financial Services (NYSDFS). This allows Bakkt to open the doors on September 23. And by opening doors we mean: they can offer their contracts on the ICE futures US. This can potentially give the course a huge boost, since all contracts are actually tied to real bitcoin.
How much institutional money will come to the cryptomarket through Bakkt? You can look at Coinbase for this. Recently, the CEO of Coinbase, Brian Armstrong, tweeted that Coinbase sees two to four hundred million dollars a week coming in from institutions.
Whether institutions were going to adopt crypto or not was an open question about 12 months ago. I think it’s safe to say we now know the answer. We’re seeing $ 200-400M a week in new crypto deposits come in from institutional customers.
– Brian Armstrong (@ brian_armstrong) August 16, 2019
This seems a lot, but it is also just a drop in the hot plate. Namely, no account is taken of how much money is withdrawn from Coinbase. Moreover, it is not comparable to the money that is being pumped around on Wall Street: we are talking about trillions of dollars.
How does market respond to Bakkt?
Zach Owen of the San Francisco Tribe writes that due to the planned launch of Bakkt, the market is full of confidence. He thinks the bitcoin will be at an all time high in no time. He also writes that market sentiment says that bitcoin most likely no longer falls below that psychological limit of ten thousand dollars. Bitcoin is and remains a volatile and relatively small market, so that remains to be seen.
But Owen also brings some nuance:
As much as I like to see bitcoin go to the moon, it is not yet completely realistic. The market still lacks understanding and the right appreciation for bitcoin when it comes to usability. I personally think that the rocket to the moon is in the making. This will not immediately make millenials a millionaire, but it is the start of the next big bullrun.
The previous major bull run of 2017 caused the exchange rate to rise from a thousand dollars to end at around twenty thousand dollars at the end of 2017.
What happened in 2017?
There are major, fundamental differences with 2017. Owen describes three:
1 – Initial coin offering (ICO)
In 2017 there was a huge increase in ICOs and token sales. This new way to raise money directly anywhere in the world clearly had a huge impact on the market. Billions of dollars suddenly flew back and forth and the price of ether rose to record highs. the money that entered the market via ether was again spread over other coins. The current variant of ICOs are initial exchange offerings (IEO). This is much more limited and better regulated than the ICOs of 2017. The market has also learned from ICO scams.
2 – Tether pumped an enormous amount of USDT into the market
The largest stablecoin is USDT from Tether. The parent company of Tether Bitfinex, pumped a lot of these coins into the market. Because they say that every USDT is linked to one dollar, this clearly had a huge impact. Owen says that the lack of volume and liquidity in 2017 was filled by a huge hump tether, something that now seems impossible. As with ICOs, Owen does not expect Tether to play a leading role in the next bull run.
3- Lack of volume
As soon as bitcoin became worth twelve thousand euros, there were hardly any zones with many sales orders. There was no resistance, so the price jumped up much too quickly without many problems. Without any sales pressure, it seemed as if bitcoin was worth a thousand dollars more every hour. The market is now larger, there are more exchanges, so a repetition does not make sense. But yes, it is and remains the cryptomarket.
The role of altcoins
Owen thinks that Bakkt is not enough to take the market to new heights. He also expects altcoins to play a major role.
Until the altcoins rise, there is a huge group of investors sitting on their mountain of altcoins. Only when these rise then money will flow to and from bitcoin again. There are so many altcoins that just keep invested, so only when the alts recover, the play money comes back.
What do you think? Is this enough to push the market to new heights?