Last month saw the approval of the Bakkt platform. An official statement revealed that clients can deposit their funds into the developed Bakkt Warehouse starting from September 6. Trading on the platform is scheduled to start on September 23.
Will this time be different or will the market react the same way as it did in December 2017 after the launch of the CBOE futures platform? In the case of 2017 after Bitcoin exploded to almost $20,000, it dumped around 85% over the 12 months that followed.
Institutional Investors Will Trade Real Bitcoin on Bakkt
A major difference between the CME and CBOE future products and Bakkt’s is that all futures contracts via Bakkt are paid in Bitcoin and not cash. That is important since it means that users who trade the product will get real bitcoins in their accounts after settlement instead of dollars.
So far, it is notable that there are continuous developments of various institutional-grade products that focus on custodianship and trading. Thus, the increasing number of institutional investors entering the market should be seen as a bullish sign for the asset class. Institutional investors enable increased access to the markets for investors and simultaneously increase general liquidity.
Commentators now are asking: How is the Bitcoin Price behaving in the run-up to the Bakkt launch date?
In the past most, it is evident that the Bitcoin market has been losing volatility extensively. Hence, it has resulted in a strong consolidation pattern forming with $9,000 serving as the immediate support. Also, there is a downward-sloping resistance that is currently hovering at $11,000.
In general, when volatility plunges to this degree, it shows that the next move will be significantly large and explosive.
Hash Rate Keeps Registering New All-time Highs
If the increasing hash rate is a sign of confidence in the underlying network, and it shows how the health and interest in the network is fairing, then the Bitcoin network must be the strongest in that context.
The Bitcoin hash rate has been constantly rising in 2019 as new miners and mining operations come online rapidly. All these miners are coming in supposedly to gain some profits before the reward halving takes place in May 2020.
Volatility index and the hash rate can be used precisely as leading indicators to forecast when a big move is likely to happen. These indicators also elaborate on the health and interest from traders, commentators, and investors at a network level.
A Breakout is Imminent Although Consolidation Continues
In the past seven days, the market conditions have comprised of low volume and choppy. Hence, analysts advise that the market is not the best to trade in unless the trader is scalping. But, high value trading opportunities are approaching rapidly. Commentators and analysts think that resolution is likely to take place either in late September or early October.
As the price hovers above $9,500, the major level to watch for an early signal of any trend formation for the bulls will be a breach and close above $10,000. That area is currently marked as the level of the bearish throwback.
The macro case for BTC and its network fundamentals strongly point to continued strength for the asset class. However, it may reveal a completely different scenario when the market is observed in the near term. Many resistance lines are forming around the $10,000 levels. As it was indicated earlier, the Bitcoin price needs to breach these levels with the bearish throwback level forming at $9,900.
If Bitcoin breaches and sustains its upward momentum above these levels, it will confirm a trend reversal for the bulls. The price will then aim for $10,200 and then $11,000. Both of these targets serve as strong order blocks. These price levels previously acted as major pivot points in price action.
The bitcoin price frequently targets these order blocks since these levels are the places where resting liquidity lies. In most cases, these levels act as stopping points for many traders.
The bearish case is the most probable. A descending triangle and a trend continuation could occur from what was seen in August. In 2019, the price has so far seen a price surge of up to 350% without undergoing any major correction since creating formidable support at $9,000.
Therefore, any failure to break the critical throwback level at $9,900 may result in disaster for the bulls. A drop will see the price fall back to the $9,000 support levels. If that support is broken, Bitcoin may experience a price pull back to the next support at $8,300. If that support does not hold, a deep sell-off may result in further drops to the $7,500 level.
Short Term Traders, Take Care!
Taking into context the strong network health and growth of the Bitcoin network and the increasing involvement, accessibility, and interest by institutional investors, everything points to a continued upside performance for BTC in the long term.
That does not mean that Bitcoin will not need to overcome various challenges as time goes by. Some of the challenges in the current bitcoin market include scaling and privacy concerns. However, history indicates that the increasing number of developers have constantly and successfully solved the challenges as they arise.
Analysts and experts advise that the short term and daily traders should remain aware of the macro factors present in the bitcoin market. It is not advisable to fight the prevailing trend for a long time since traders may risk blowing out their trading accounts.
Reducing trading frequency, setting alarms, and taking just the high risk/reward trades in most cases guarantee the best results and minimize the risks of losses considerably. Experts advise that capital preservation is as productive as growth when the trader is unsure of the market direction.
Taking into account strong fundamentals, macro trend, and considering the May 2020 halving, pullbacks should be considered to be dip-buying opportunities with around a one-year outlook.