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When (or if) Bakkt successfully launches its Bitcoin exchange platform could have an impact on the direction of the entire cryptocurrency market.
Bakkt has great ambitions for what would be the first future contract with Bitcoin. For Bakkt seeks to create more than one regulated and liquid regulated US market to trade bitcoins. It also plans to provide a scalable system for consumers, traders and businesses that use Bitcoin to conduct cost-effective global trade.
Granted, like reported in The Daily Hodl, Bakkt is not the only game in town. ORtrades are also vying to launch physically delivered cryptocurrency futures, such as CoinFLEX based in Hong Kong. But how could the news about Bakkt in the United States still potentially influence the cryptocurrency market?
According to a she studies by the Bank for International Settlements (BIS), the announcements of general prohibitions on cryptocurrencies or the restrictions that subject them to the jurisdiction of the securities have the greatest negative effect on cryptocurrency prices. On the contrary, announcements on "specific legal frameworks" adapted to cryptocurrencies and initial coin offerings coincide with strong market gains. The authors of the study hypothesize that the market generally reacts positively to progress on "specific legal frameworks", as these regimes tend to have lower control rules than the securities law.
To apply to the US Commodity and Commodity Trade Commission (CFTC) instead of the SEC for the approval of its platform, Bakkt It is looking for a very special regulatory framework. So if the platform is started correctly as scheduled on January 24th, or soon after because of the holidays, the prices of cryptocurrencies could be rebounded or, in theory, find more sustained support.
Favorable regulatory announcements coincided with an increase of 1.52% in bitcoin prices, for example within 24 hours, according to the BIS report, while unfavorable announcements coincided with a 3.1% decline. The price movement tends to be higher in the 10 days surrounding the announcement, according to the study, with progress on specific legal frameworks that increase the price of Bitcoin from 5% to 22%.
The market reaction could go either way, depending on how Bakkt's tariffs are. The March 2017 refusal of a proposed change in stock exchange rules to allow a Bitcoin ETF caused a 16% drop in Bitcoin in the five minutes around the announcement, according to the report. And the launch of Bakkt was twice postponed, more recently, to January 24, 2019. But the prospects seem increasingly promising. Second The Wall Street newspaper, Bakkt "… should soon get regulatory approval".
As we affirm in our previous message, Bakkt has a lot to offer.
"Its owner, ICE (Intercontinental Exchange Inc.), has accumulated an extraordinary record of creating, revitalizing and optimizing regulated financial exchanges – not only does ICE manage six major regulated financial markets, including the New York Stock Exchange, but it sells data on exchange rates and analysis, its largest revenue generator It would be difficult to find a more experienced trader able to guarantee institutional and regulatory confidence to create a well regulated and liquid market ".
If Bakkt obtains regulatory approval and successfully launches its platform, its quest to add market integrity and core value to Bitcoin could provide a boost of confidence to the entire cryptocurrency market.
Brian Sewell is the founder of Rockwell Trades, an OTC cryptocurrency trading service.
This material is provided for general educational purposes only and is not an investment, legal, tax or professional advice or an offer to buy or sell goods. The opinions given here are exclusively those of the author's personal opinions and should not be invoked in making decisions regarding cryptocurrencies. This material may be inaccurate and the author need not update this content or correct it at any time.
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Disclaimer: The opinions of our guest writers are exclusively their own and do not reflect the views of The Daily Hodl. These opinions expressed are not investment advice. Investors should do their due diligence before making high-risk investments in Bitcoin, cryptocurrency or digital assets. Please note that your transfers and operations are at your own risk and any losses you may incur are your responsibility. The Daily Hodl does not recommend the purchase or sale of any cryptocurrency or digital assets, nor The Daily Hodl is an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
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