Waiting For Bakkt? Bitcoin Volatility on Ice, S&P 500 Shaken, Stirred
Investors appear to be waiting for Bakkt to launch its bitcoin futures exchange as bitcoin price volatility sees little movement, in stark contrast to the stock market slump.
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Waiting for Bakkt
On October 22nd, ICE Futures US Inc. issued a press release announcing bitcoin futures trading would commence on December 12th. Originally slated for a November launch, the Bakkt platform was delayed slightly and pushed back to later in the year. Per the Bakkt statement:
“ICE Futures U.S., Inc. will list the new Bakkt Bitcoin (USD) Daily Futures Contract for trading on Wednesday, December 12, 2018. The Bakkt Bitcoin (USD) Daily Futures Contract is a physically-settled daily futures contract for bitcoin held in Bakkt LLC, ICE’s Digital Asset Warehouse, and will be cleared by ICE Clear US, Inc.”
It is widely perceived that ICE’s engagement in bitcoin will help create institutional investor demand. With digital currency custody seen as a major barrier to wealth manager interest, Bakkt will help soothe those nerves with its investor-grade custodial solutions:
“Each futures contract calls for delivery of one bitcoin held in the Bakkt Digital Asset Warehouse, and will trade in U.S. dollar terms. One daily contract will be listed for trading each Exchange Business Day.”
Bitcoin Price Volatility Slumps to Sub-S&P 500 Levels
The S&P 500 is now down nine percent from levels on Trump’s inauguration day. The lion’s share of that drop has occurred in the past four weeks. In the beginning months of the Trump presidency, stocks trended upward in the bullish Trump trade, a result of the president’s pro-business stance and sentiment momentum.
Meanwhile, bitcoin has traded in a thin range for the past two months. The infamously volatile digital asset has a 60-day volatility index of slightly over two percent. Its 30-day volatility index is less than 1.5 percent.
Whale Manipulation or the Bakkt Waiting Game?
With the SEC still to give a final ruling on the VanEck SolidX Bitcoin Trust ETF proposal, it is possible large holders of bitcoin are deliberately stabilizing the price of the crypto. One of the regulator’s chief concerns over regulated bitcoin exchange products has been its susceptibility to manipulation. So are whales ironically manipulating the SEC into seeing stability as a sign of less manipulation?
Another reason for the plunge in crypto volatility is widespread savvy hoarding of the currency in anticipation of a Bakkt-led bounce. Given Bakkt’s custody solutions, the platform will hold physical bitcoin–creating a natural baseline level of demand for the cryptographically supply-limited asset.
Bakkt is also working with Starbucks and Microsoft to help ease the crypto-fiat conversion friction point, which remains a hindrance to bitcoin adoption.
It will be interesting to see how Bakkt’s launch will affect price stability in the cryptocurrency market.
Have your say. Are you waiting for Bakkt? Are whales suppressing wild price swings to assuage the SEC’s manipulation nerves?
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