The new Bitcoin futures product was launched this week by a company called Bakkt, developed by the Intercontinental Exchange (ICE), owner of the New York Stock Exchange. The Bakkt futures product settles in actual Bitcoins, unlike a similar product from the Chicago Mercantile Exchange group, which settles in US dollars.
The Bakkt project is meant for institutional investors who may have been skeptical of investing in Bitcoin due to the absence of regulated exchanges for big players.
This recent price drop might be a classic case of “buy the rumor, sell the news”. There was a lot of hype and expectations leading up to the Bakkt launch. The trading volumes on Bakkt have been very underwhelming these first couple of days. At the same time low early volume shouldn’t be taken as a sign of Bakkt’s longer-term viability.
Bitcoin does not need Wall Street and banks to get involved to be a success. Their involvement just validates Bitcoin further as a strong and long-term investment.
The FED prints another $275 billion
Over the last week the New York Federal Reserve injected over $275 billion into the financial system.
The NY Fed stated this was done to keep the federal funds rate within its target range. Short-term rates had earlier last week shot up as high as 10%, threatening to disrupt the bond market and the overall lending system. At the same time, the Federal Open Market Committee also cut its benchmark interest rate to a target range of 1.75%-2% from the previous 2%-2.25%.
The nature of the dollar is devaluation through printing, but Bitcoin’s market cap will keep the supply at 21 million.
Bitcoin droped to $8200
Bitcoin broke to the downside yesterday, trading around $8400. However, the market structure is still bullish in the bigger timeframes.
Looking at past Bitcoin bull markets it is common to see 30%-40% corrections. The price has dropped 40% from the recent high at $13,800.
Bitcoin is currently finding support at the 200 day moving average. If the price bounces here then we are potentially looking to continue the bull market.
The Relative Strength Index is showing an oversold condition indicating that the price could spike soon.
” The market is designed to transfer money from the active to the patient.” – Warren Buffett