Bitcoin Price Deeply Discounted After ICE’s Bakkt Announcement
The bitcoin price fell deeper into correction on Saturday, pushing the digital currency closer to bear-market territory as investors shrugged off a potentially game-changing announcement by Intercontinental Exchange.
Bitcoin’s selloff intensified on Saturday, with prices hitting a low of $6,955.00 on Bitfinex. That was the lowest level in almost three weeks. The leading digital currency has since recovered to around $7,013, where it was down 5.5% from yesterday.
At current prices, bitcoin is capitalized at $120.7 billion, according to CoinMarketCap. Total trade volumes are worth $4.2 billion.
Since peaking above $8,500 last month, the bitcoin price has declined more than 17%. A fall to $6,800 would put BTC into bear-market territory, based on the generally agreed upon definition of the term.
As Hacked previously reported, bitcoin’s initial reversal was driven largely by technical re-positioning after prices entered overbought territory at the height of last month’s rally. On Friday, BTC crossed below the 100-day moving average, another bearish signal.
Bitcoin’s Fundamental Discount
Bitcoin’s latest breakdown came less than a day after Intercontinental Exchange (ICE) announced it was entering the cryptocurrency market with potentially game-changing implications. ICE, which operates 23 regulated exchanges including the New York Stock Exchange, is teaming up with some of America’s most iconic companies to bring bitcoin to mainstream circles.
Bakkt, the new startup that will hold and manage investors’ cryptocurrency, is looking to integrate bitcoin with the mobile shopping experience. At stake is roughly $25 trillion in fees currently doled out to credit cards and online shopping vendors.
Backed by Microsoft cloud services, Starbucks and a bevy of top investors, Bakkt aims to “build confidence in [cryptocurrencies] on a global scale,” according to Jeffrey Sprecher, ICE’s founder, chairman and CEO.
The market’s tepid reaction to the news suggests that technical forces are likely at play in keeping the bitcoin price rally under wraps. This is somewhat perplexing, given that murmurs of a potential crypto exchange-traded fund was partially responsible for bitcoin’s nearly 26% gain in July.
To be clear, Bakkt is scheduled to launch in November – pending regulatory approval. Given the market’s reaction, that timeline may be under scrutiny by investors who’ve grown accustomed with regulatory letdowns.
This isn’t the first time the bitcoin price has discounted bullish fundamental news. As Hacked previously speculated, the mismatch between positive fundamental news and bitcoin’s performance largely stems from the absence of new traders in the market. While the shift to institutional custody is ongoing, it’ll be a while still before the big banks and hedge funds make the same type of noise as last year’s retail boom. In the meantime, there is plenty to be excited about if you are a bitcoin holder.
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.