Bitcoin is currently down by about 13%, inviting different interpretations as to what’s behind the top coin’s downward turn.
As of the time of writing, Bitcoin was circling around the $8,400 mark, signaling a hefty 17.8% loss on the week.
Is Bakkt to blame?
One of the theories going around is that the market’s disappointment at the apparently tepid uptake of Bakkt’s recently introduced, physically-settled Bitcoin futures contracts among corporate clients.
The contracts, which break the mould by being settled in Bitcoin rather than in fiat money, went live on September 22, in what had been an eagerly-awaited moment for the crypto sector as a whole.
However, the slow volumes soon after the product’s introduction may have dampened investor sentiment, as observers took stock of the apparent fact that corporate demand for Bitcoin exposure may not be as solid as previously presumed.
59 BTC has traded on the platform over the course of 24 hours before the time of writing; a total of 166 contracts traded yesterday, September 24, according to a report from Reuters. Jamie Farquhar, portfolio manager at London-based cryptocurrency company, NKB Group, told reporters:
“It’s one thing to give institutional money access to BTC. It’s another thing to make them comfortable enough to actually buy it.”
And in a September 23 tweet, trader Alex Kruger observed:
“Bakkt, first day volumes: 71 bitcoin. CME, first day volumes: 5298 bitcoin. That’s a 75x difference.”
Could it be Trump or Technicals?
The Bakkt theory has not gained unanimous support, though, as many consider a post-mortem within a few days of the product’s introduction to be premature.
Some commentators are pointing to technical issues subtending Bitcoin’s price weakness. One of them include in-depth coverage by Cointelegraph earlier this week.
Yet a further theory making the crypto Twitter rounds is more geopolitical and macroeconomic in nature, with breaking news of an impeachment inquiry into the U.S President Donald Trump over his controversial call with the Ukrainian president.
Others have correlated the coin’s weak market shifts with this broader picture, as conventional markets stagger from the latest jolt in U.S politics. Analyst Holger Zschäpitz tweeted on September 25:
“Global stock markets rattled as Trump impeachment bid increases prospects of prolonged pol gridlock in Washington. Bonds steady w/US 10y yield at 1.65%, 10y Bund at -0.61%. Gold at $1530 as holdings in Gold ETF at highest since 2013. Bitcoin trades at $8.5k after sudden collapse.”
Many cryptocurrency and traditional market analysts, furthermore, observe that the lower interest rates endorsed by Trump represent “rocket fuel” for Bitcoin’s price, adding more material to the argument that his controversial presidency is, on balance, largely positive for the crypto.
Trump has been increasingly forthright about the Federal Reserve’s monetary policy, tweeting earlier this month in support of more dramatic action:
“The Federal Reserve should get our interest rates down to ZERO, or less, and we should then start to refinance our debt. INTEREST COST COULD BE BROUGHT WAY DOWN, while at the same time substantially lengthening the term. We have the great currency, power, and balance sheet.”
Nonetheless, the central bank held fast with a more accurate approach, last week reducing its benchmark rate to just under 2%.