Over the past 12 hours, the price of Bitcoin which was dangerously close to breaching the $4000 level, surged from $4050 to $4560 by more than 12%. On Coinbase and major fiat-to-crypto exchanges like Kraken, BTC dropped to as low as $4030 for a brief period of time and recovered to almost $4200 immediately after. It also rebounded to $4500 showing some resistance in the low $4000 region.
Bakkt Controversy
ICE, the parent company of NewYork Stock Exchange, released a statement regarding the delay of the Bakkt BTC futures market launch from December 12 to January 24, 2019. ICE needed more time to handle the onboarding of customers and clearing members before opening the futures market. Rumors emerged the Bakkt delay caused the price of BTC to drip and the information was leaked to a handful of large-scale investors in the cryptocurrency market.
Some argued that Bakkt acknowledged growing demand for its futures product that the investors bought into BTC as it dropped to the low region of $4000 and it was all a plan to accumulate more of the dominant cryptocurrency. However, there is no evidence to support the significance of Bakkt. Generally, the sentiment around the Bakkt delay has been positive. Hence it is premature to conclude that it has somehow influenced the price of BTC in such a significant way for the asset to fall 12 to 15 percent in value.
Seeing the poor conditions and intensity of drop of BTC in the last 5 days, investors, even those who bought at $1000 to $2000, are expected to sell a significant chunk of their holdings fearing a further drop below the major support levels. Investors in the 1st quarter of 2017 are still up 50 to 100 percent on their investments. But the cryptocurrency market has not seen a correction of this scale since 2014 when the value of BTC dropped by more than 85%. BTC is yet to achieve an 85% drop from its all-time high at $19500. An 85% drop from $19500 is $2950 and the dominant cryptocurrency would have to drop by more than 32% from $4400 to dip below $3000.
BTC hasn’t traded at $5000 since October 12 last year when it briefly passed through the milestone during its meteoric run-up to an all-time high of $20,000. The digital currency has hovered around the $6000 mark for most of 2018 after the entire cryptocurrency market crashed at the start of the year, but many enthusiasts believe it would not drop below $5000 again.
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