As Bitcoin continues to stumble downwards, every red tick becomes increasingly worrisome for fearful bulls. Early this morning, Bitcoin found itself in a momentary flash crash to the $3,400 mark. Fortunately, traders erased this slip and even contributed to slight gains on the day.
At approximately 6:40am EST, Bitcoin fell from its position around US$3,550, hard, to lows of $3,400 across several major exchanges, such as BitMex and Binance. This represented a drop of over 4% in a matter of minutes, dropping the BTC market cap by over $2.5 billion.
Within the half hour, however, those losses were erased, and minor gains were achieved. Bitcoin has been gaining slightly in the several hours following the occurrence, sitting at about a 1% increase in the past 24 hours. At time of writing, Bitcoin is trading at just above US$3,600.
Two days ago, Bitcoin saw an even sharper decline, as the currency fell approximately $200, from US $3,750 to $3,550. Since then, the charts have moved relatively sideways, leading optimists to anticipate an inverted Bart pattern- where an equally steep pump would erase the losses from days prior (and make the shape of Bart Simpson’s head). As we are seeing slow upwards movement, however, this possibility is becoming less and less likely.
Bakkt Drama Ahead?
The increased volatility could be linked to the expected Bakkt release on January 24th. There is significant evidence that this release will be delayed once more, and the nature of the circumstance is out of Bakkt’s control. The last requirement for Bakkt to launch is approval by the US Commodity Futures Trade Commissions (CFTC). As the US government shutdown is ongoing, the CFTC has been unable to convene to approve the exchange. The launch of Bakkt will likely come approximately one month after the government is restored to operation.
While this may come as no surprise to American traders, it is possible that some international speculators may be unfamiliar with the workings of the US Government, and may not expect any hiccups at the federal level to affect the timeline of Bakkt. For many enthusiasts, January 24th is circled in red ink on the calendar, and the lack of any major activity may induce an increased level of FUD (fear, uncertainty, doubt) within these individuals.
Regardless, the United States government will inevitably come back around, which means the approval of Bakkt will as well. As many are anticipating this next delay, the effects on the market could be miniscule or even nonexistent. The wait is well worth it, as Bakkt enables their pipeline of clients to interact with crypto without violating legal and cotractual obligations for the first time. The new players will certainly make a splash upon their arrival.