Bad news for crypto, but institutional investors aren’t letting opportunities pass by

October 24, 2019
“Chase your passion, not your pension.”
― Denis Waitley

5-Day Change

  • Bitcoin: $7,486
  • Ethereum $163.1
  • Ripple $0.2773
  • Litecoin $50.15

Bitcoins Plunges while Bakkt Volumes Set Records

Bitcoin wasn’t able to maintain the bullish signals from earlier this week...and the result hasn’t surprised anyone. The price is now at a 5-month low of $7,400 at the time of publication. As forecasted last week, further drops are expected before the bulls start biting. But that’s not the whole story – trading volumes on the Bitcoin-settled Bakkt futures exchange have set a record high as institutional investors buy up Bitcoins on the cheap.

Why is it crashing instead of recovering? There are no definitive answers, but there are theories. The first theory has to do with the cascading effects at some exchanges, following a dump of 3,600 BTC for sale. The second theory has to do with the scrutiny over Facebook’s Libra project as CEO Mark Zuckerberg faces a tough crowd on Capitol Hill. Another theory addresses Google’s quantum computing breakthrough, which may have spooked less tech-savvy investors worried about encryption breaking (don’t worry – quantum computing or not, the cryptography part of cryptocurrency isn’t expected to be overly impacted.)

So what now? The drop may not be over just yet, as Bitcoin has yet to reach the $6,500 lows predicted in this case, so betting on further plunges may not be a bad idea. But that may represent an opportunity for traders looking ahead to the upcoming halving

What about those Bakkt volumes? They hit an all-time high of 640 contracts traded in a single day, thanks to falling prices. Institutional investors, it seems, aren’t letting any opportunity to profit off cheap Bitcoins pass them by – and today’s trading may beat that record

Wut We Think: It’s clear now that Bitcoin is in an established downtrend that’s going to continue for some time. It will likely dip into the mid-high $6,000 range before stabilizing. However, the effects of the Bakkt futures market on the spot price is still poorly understood, as it is pretty new, so it may be that Bakkt investors may turn bullish themselves. But there still remains the negative press from the continuing saga of Facebook and Telegram, so it doesn’t seem likely that Bitcoin’s fortunes will reverse at least for the next few weeks.


Telegram and Libra Aren’t Out of the Picture Yet

Despite negative criticism and strongly-worded injunctions...Telegram and Facebook aren’t giving up on their dreams of releasing their currencies (though technically, Telegram’s TON coin is the only ‘proper’ cryptocurrency of the pair.) But both Libra and Gram have been put through the wringer in recent days, with Facebook’s Mark Zuckerberg facing down pointed questions during hearings in DC.

What did the hearings reveal? That Libra may not be a single currency backed by a basket – but instead, have multiple coins tied to different currencies. And that Calibra, the Libra wallet, would probably have ‘strong identity’ to satisfy AML requirements.

And what about Telegram? Despite the SEC injunction, their investors are standing behind the messaging app’s promise of a cryptocurrency – they recently voted against taking a refund as the promise of the release deadline of October 31st seems unlikely to be kept. 

But they may still fail, right? Sure, there are no guarantees in life. But it helps to remember that Telegram has been complying with nearly every condition the SEC had setas explained in their response to the SEC. It’s less certain for Libra, which saw the departure of major payment processors like Visa and Mastercard leave the Association – but plenty of other big hitters stayed on board.

Wut We Think: It’s too early to call for a definitive end to either of the two companies’ digital currency projects, and they still represent the best shots for blockchain technology to enter the mainstream. But the whims of global regulators can be capricious, and it’s too early to discount the chance that both projects will crash and burn. In any case, there’s probably not going to be good news on that front for a few weeks, and that may have a downward effect on crypto prices as a whole.


Trading Spotlight: Bears and Bulls

Some of the most common phrases traders will see when browsing financial news are the terms ‘bears’ and ‘bulls’. And while that may seem a bit fanciful, they’re actually quite easy to understand and immediately conjure a direct association in the minds of experienced traders. Knowing whether the bulls or bears have it is critical to properly evaluating the progression of a trend.

Bear and Bull Markets: Names for downwards and upwards trends in trading, or for selling and buying more generally. Bear markets are those where prices are generally trending down, while the bearish adjective typically indicates that sellers are dictating terms of the market at the moment. Bullish adjectives suggest the opposite, and bears and bulls are often presented as being in opposition – though it helps to remember that these aren’t immutable teams, but post fact descriptors applied to observed price movements. Read more at the Monfex Trading Academy.

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