According to Bloomberg, JPMorgan analysts state that the much-awaited launch of Bakkt's physically-delivered Bitcoin futures is the reason why the BTC price tanked by more than 20 percent this week.
The writing was on the wall
While hardly anyone denies that the fact that Jeffrey Sprecher-helmed Intercontinental Exchange diving feet-first into Bitcoin is a major milestone for this nascent asset class, there was no consensus within the crypto community about how it would impact the market.
As reported by U.Today, Anthony Pompliano of Morgan Creek Digital conducted a Twitter poll to gauge the sentiment within the crypto community. 26 percent of the responders believed that the price would go down. As it turned out, the Bitcoin bears hit the nail on the head this time around.
What will happen when Bakkt launches?— Pomp 🌪 (@APompliano) September 20, 2019
Notably, the launch of cash-settled Bitcoin futures by CME Group also sent the market into freefall at the end of December 2017, kicking off a prolonging crypto winter.
JPMorgan is on the same page
JPMorgan strategists claim that Bakkt signifies the maturity stage of the nascent cryptocurrency market, but they also believe that the ICE-backed exchange is responsible for the steep price drop. After hyping up its launch for months, it debuted with very underwhelming trading volumes.
“It may be that the listing of physically settled futures contracts (that enables some holders of physical Bitcoin e.g. miners to hedge exposures) has contributed to recent price declines, rather than the low initial volumes,” the banking giant said in its recent report.
They have also noticed that the number of long positions in CME Bitcoin futures contracts has significantly declined over the past few months.
"Rule of 10 best days"
The dramatic BTC price downturn called into question the bull market narrative. The relative strength index (RSI), which is used to evaluate overbought and oversold conditions, dipped below 50 for the first time since April (a major red flag for the bulls).
Meanwhile, Fundstrat analyst Tom Lee reminds investors that holding is the best way to catch the biggest gains given that they usually come in just 10 days.
Before everyone starts freaking out whether crypto winter is over, remember the @fundstrat ‘rule of 10 best days’ (rule #6)— Thomas Lee (@fundstrat) September 28, 2019
- ex-10 best days, #bitcoin down 25% per year. All the gains come in 10 days. Are u that good at trading?
PS: we believe $BTC is weak in trendless macro. pic.twitter.com/zzDOfPjVBq