The latest SFOX cryptocurrency volatility report has nudged the market sentiment dial back a notch. While August was ‘mildly bullish’, September was a let-down in many ways mainly due to the lack of involvement from institutional investors.
The outlook for the rest of October is marked by uncertainty and instability. The prognostic is neither bullish nor bearish but set to ‘neutral’. So, let’s take a closer look at some of the events driving the crypto markets over the last few weeks.
Bakkt’s lacklustre launch to institutional investors
At the end of August and ahead of the upcoming launch of Bakkt, market sentiment was mildly bullish. There was a sense that the game-changing brainchild of the parent company of the New York Stock Exchange with its physically-delivered Bitcoin futures offering would open the floodgates to institutional investors–and their trillions of institutional investment dollars.
However, that hasn’t happened.
In Bakkt’s first week of trading, the volume was comparable to the amount that some cryptocurrency exchanges see in just four minutes of trading. That’s right. Not four days, not four hours, but just four minutes.
Immediately after Bakkt’s tepid launch, BTC price plunged by nearly 18% from $9823.40 to $8045.88. It appears that institutional investors aren’t as ready as we thought they were to enter the Bitcoin space or even view it as a major asset class.
PayPal’s withdrawal from the Libra project
On October 4, PayPal dealt a painful blow to Facebook by withdrawing its support for the Libra project. This lead to greater uncertainty in the market with many people questioning whether investing in Libra is seen as akin to investing in crypto as a whole.
The going has been mainly uphill for the social media company with designs on launching its own cryptocurrency. Many countries including France and Germany have jumped to block the Libra project from operating in their jurisdictions. And with payment giant PayPal withdrawing its support and US lawmakers urging Visa and MasterCard to follow, the outlook isn’t looking rosy.
We already know that Libra is nothing like Bitcoin. It’s not decentralised or trustless and not a direct competitor in any way. However, this backtracking from key companies and institutional investors is leading many to question whether investing in Libra is a proxy for crypto acceptance by institutions as a whole.
Apple’s unclear stance on cryptocurrency
Apple, too, has been getting the community talking in more ways than one. On September 5, its VP of Apple Pay Jennifer Bailey reportedly told CNN that Apple was “watching cryptocurrency” and that the tech giant found it to be interesting and have “long-term potential”.
However, Apple’s somewhat bullish comments at the start of September were quickly nipped in the bud by CEO Tim Cook last week. Speaking to French news site Les Echos, he reportedly said that “currency should stay in the hands of countries” and that he’s “not comfortable with the idea of a private group setting up a competing currency”.
The SEC fine on Block.one over EOS ICO
The SEC fine on Block.one over the EOS ICO may have sent out some mixed signals to the market. On 30 September, the US Securities and Exchange Commission announced that it had reached a settlement with Block.one of $24 million for conducting an unregistered ICO for the EOS network. In some ways, this is a sign that US regulation is becoming stricter and more ICO projects will be in the Commission’s sights.
In other ways, many expected the fine to be much greater since the famed EOS ICO raised the equivalent of billions of dollars. In this light, $24 million is a mere drop in the ocean of the total raise and could indicate a certain amount of leniency on the part of the SEC.
It wasn’t all bad for the crypto markets
It wasn’t all bad for the crypto markets in September, however, and the zigzagging of BTC price appears to be reflecting uncertainty rather than straight out doom and gloom. Major player in the Bitcoin Futures market CME Group, for example, announced on September 20 that it planned to add BTC futures options, as well as double its current offering as a sign that it sees growth on the horizon. This announcement lead to a 2% rise in BTC price from $9972.96 to $10166.38.
Along with Bakkt, CME is further paving the way for greater institutional involvement. It’s true that Bakkt may not have had the effect that many people were hoping for. But the fact that institutional funds haven’t come flooding in just yet doesn’t mean that they won’t.
All eyes for the coming months will be on Bakkt’s trading volume, CME Bitcoin futures last trade date and offering updates, and further developments with Libra.