Bitcoin, Bakkt and Ethereum Classic Headline Volatile Week for Crypto Industry
Coming off one of its worst declines since the 2019 bull market began, bitcoin appears to have found support above $10,000, a psychologically significant level that has attracted significant media attention. After all, it was just seven months ago that the largest cryptocurrency was escaping its most high-profile bear market, with a peak-to-trough decline of roughly 84%.
The biggest development of the week wasn’t in the technical charts, but in the news after Bakkt finally announced the launch date of its physically-settled bitcoin futures market. The announcement came shortly after Coinbase’s CEO said institutional adoption of cryptocurrencies was on the rise.
Bitcoin dropped below the all-important $10k level several times over the past week, setting the stage for a steeper selloff in the short term. The cryptocurrency came within striking distance of $11,000 on Tuesday before tumbling all the way back down to the $9,700 range a few days later.
The BTC/USD exchange rate swung back above $10,000 on Friday, virtually breaking even for the week.
While many expect bitcoin to re-test the mid-$9,000 range, Bloomberg has provided a contrarian view based on the GTI Vera Band Indicator, which measures price trends in financial assets. As Bloomberg notes, bitcoin’s price has fallen below the Vera Band. The last four times that happened, it managed to quickly return into the range.
Another possibility is that bitcoin has entered a consolidation phase after more than quadrupling in price through late June. As Hacked reported earlier this week, bitcoin’s 30-day volatility index has fallen to its lowest levels in three-and-a-half months.
Ethereum Classic Scales Crypto Market Rankings
Ethereum Classic surged through the crypto market rankings this week, locking in gains of more than 30% ahead of a scheduled hard fork next month.
The ETC price is back above $7.00 for the first time since July 10, bringing its total market capitalization to $811 million. The cryptocurrency is now the 16th largest by market cap, overtaking Tezos and Chainlink.
The explosive move higher came after Stevan Lohja, a technology coordinator at Ethereum Classic Labs, announced that the ETC network would undergo a hard fork at block 8,772,000 mil. Dubbed Atlantis, the protocol upgrade will see more than half a dozen technical improvements implemented.
ETC’s gains dwarfed the broader cryptocurrency market, which underwent a sharp correction in the latter half of the week. Ethereum, XRP, EOS and Cardano all reported weekly gains. Litecoin, Binance Coin and Monero traded slightly lower.
Bakkt Ready for Launch
After more than a year of anticipation, Intercontinental Exchange’s Bakkt futures market is finally ready for launch.
Beginning September 23, investors will be able to trade physically-settled bitcoin futures contracts in an “end-to-end regulated marketplace” directly through Bakkt. As a qualified custodian regulated by the U.S. Commodity Futures Trading Commission and New York State Department of Financial Services, Bakkt will be the first platform to settle contracts in actual bitcoin.
Intercontinental Exchange and its donors established Bakkt in mid-2018 to service institutional investors, an underserved market as far as crypto is concerned. The launch of Bakkt is happening at just the right time. Coinbase CEO Brian Armstrong recently said that his firm is seeing institutional inflows of between $200 million and $400 million every week.
Bakkt was designed to do a lot more than just accept institutional deposits. When the company first launched, it had an explicit mandate to build digital payment infrastructure for American retailers. To that end, Bakkt has already onboarded Microsoft and Starbucks as partners.
The Week Ahead and Things to Consider
Ethereum Classic’s power move is fueling optimism that the long-awaited altcoin season may soon return. Traders are already looking ahead to Ethereum’s planned upgrade later this fall. If Ethereum rallies like ETC, there’s an outside chance that altcoins may see another pump before the end of the quarter.
Until then, the crypto markets are becoming increasingly synonymous with bitcoin once again. The largest and most influential cryptocurrency accounts for roughly 69% of the entire market share. If this number doesn’t’ drop, altcoins and tokens will be forced to trade within bitcoin’s orbit indefinitely.
Concerns about a slowing global economy have made bitcoin a more attractive investment option for investors looking to safeguard against inflation, recession and stock-market volatility. Bitcoin has shown flashes of being a safe-haven asset, but it continues to be largely uncorrelated from the broader market. Its performance relative to gold should be closely monitored by investors.
Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock. Charts via CoinMarketCap.