Bitcoin and Ethereum dive deep, is Bakkt to blame?

After remaining fairly stable at around $10,000 for several months, the price of Bitcoin plummeted by roughly 15% late on Tuesday, reaching a low of $8,165 on Coinbase. 

Other major cryptocurrencies, like Ethereum and XRP, followed suit, recording similarly drastic losses before recovering slightly. The prices at writing time are $8,398.1 for Bitcoin, $165.9 for Ethereum, and $0.24 for XRP according to CoinMarketCap.   

Sharp losses and gains in the world of cryptocurrencies aren’t uncommon, but this event is interesting for several reasons. Besides breaking a period of relative stability and pushing the prices of major cryptocurrencies to levels unseen by June, it comes after a few interesting developments for the crypto space. 

Most important among these is likely Monday’s launch of a cryptocurrency futures product by Bakkt, a crypto market backed by the Intercontinental Exchange, Microsoft, Starbucks, and Boston Consulting Group. The long-expected launch has seen tepid interest from investors, with a volume of just 71 bitcoins. 

“The disappointing BAKKT opening signals to the crypto community that institutions are less ready to invest in BTC at scale than was supposed, which means the price was probably too high and due for a correction. What we’ve just seen is short sellers and momentum traders piling on to make things worse, and now here we are back at support,” Alex Mashinsky, CEO at crypto lending and depository company Celsius Network, told Mashable in an emailed statement. 

It’s also worth noting that the launch of CME’s bitcoin futures product in Dec. 2017 roughly marked the end of a wildly bullish period for cryptocurrencies and the start of a grueling bear market which lasted a year. 

Earlier this month, VanEck and SolidX have withdrawn their proposal for a Bitcoin exchange-traded fund (ETF). Numerous similar proposals have all been rejected by the U.S. Securities and Exchange Commission, which has so far found the cryptocurrency markets aren’t mature enough to approve an ETF product. 

Now, the question is whether we’re still in a bull market, or has this latest price drop reversed course completely. The price of Bitcoin experienced a period of fairly steady rise  since January, increasing from roughly $3,500 to over $13,300 in July — and most major cryptocurrencies followed in a similar trajectory. Now, however, prices have been on the decline for more than two months, and the case for a bull market is getting weaker by the day. 

Disclosure: The author of this text owns, or has recently owned, a number of cryptocurrencies, including BTC and ETH.