Bitcoin Breaks Down After Bakkt Bust and Curious Hash Rate Drop, But Rises $250 USD Today
After weeks of indecision and what appeared to be a strong argument for $10K BTC, bear pressure finally broke through the lines and took Bitcoin down hard, reaching at a low of $7,950 BTC/USD price point, the lowest since June 11th of this year.
The carnage on the charts wasn’t limited to BTC, however, as all the majors (ETH, XRP, EOS, XLM) took hits in the double-digits. The surprising and impossible to predict turn of events led to the crypto market looking more like a smoldering crater than an asset class with a bright future.
Currently, BTC is trading hands a shade over $8,225 while a select few majors, like XRP and ETH, appear poised to recover some of their losses.
Bitcoin shed nearly $2,000 in value before the market had time to blink, leading market observers to seek answers.
A flash crash of this magnitude hasn’t been seen in months. Given the relative stability of crypto’s leading digital asset across recent weeks, suspecting the involvement of concomitant factors is certainly warranted.
While this week’s losses appear insufferable, they’re only the third-worst of the year. What we’re implying here is that on two other occasions in 2019, Bitcoin has taken a massive beating and recovered.
Let’s take a look at what contributed to the market wreck this week.
There are a million ways to spin the Bakkt debut, but here is the reality. Bakkt flopped. Perhaps belly-flopped is more accurate here. What was a hotly anticipated date – Bakkt’s physically settled BTC futures debut – turned into a dud to date.
It was kind of like finally lighting your favorite firework, watching the flame move down the fuse with indescribable excitement, then feeling speechless disappointment when the firework fails to go off.
In its first 24-hours, Bakkt settled a mere 78 BTC futures which, ironically, settled October 2019 futures at below $10K.
The immediate market takeaway from the hollow debut wasn’t too difficult to guess – big financial institutions aren’t all that interest in BTC.
Or are they?
We’re more inclined to think that the situation is a more simple than it seems. Institutions who are ready in the here and now to buy BTC can already do so using OTC exchanges. At this early stage in the crypto game, an institution willing to buy now is already adventurous and probably doesn’t need the Bakkt onramp.
We’re not saying Bakkt is pointless, though. What the flop debut reveals is that even though mainstream institutions aren’t breaking down Bakkt’s door yet, they might do so down the line when BTC adoption and consciousness finds real legs.
As a piece of infrastructure, Bakkt is incredibly important for crypto.
The only thing is, it might be slightly ahead of its time.
BTC Hash Rate Crash
This is a quickly developing story that is still sans deep details, but here’s what we know.
On September 23, the Bitcoin network hash rate plummeted 40% in what was one of the largest intraday hash rate drops in network history.
The reasons behind the strange crash are still shrouded in mystery.
A high hash rate means miner competition to validate blocks is healthy, which in turn makes the network more competitive and, thus, secure. An increasing hash rate is viewed as bullish, while the opposite is viewed as, well, bearish.
Some have speculated that the hash rate crash was caused by a firmware upgrade to account for the network’s incoming difficulty increase. Jeff Brandt, a user posting to crypto news media site CT comments section, described his view of the situation:
“The explanation is simple. The next diff increase in 2 days will push previous gen S9’s (roughly 50% of the network) below profitability.
Last week an unrestricted firmware for S9’s was posted and every large farm operator is working at a feverish pace to get approximately 3 million machines updated.
The new firmware has optimizations that squeeze the very last bit of efficiency out of the S9 lowering the watts/thash-sec from 96W to ~80W.
Some machines can perform with no degradation to speed, while older machines must drop performance by ~30% to achieve the same results.”
Three significant factors colluded to cloud the cryptocurrency market with a gloomy outlook.
VanEck SolidX’s ETF withdrawal, a sudden hash rate crash, and Bakkt’s weak debut happened in nearly perfect unison, giving a sideways BTC the motives needed to break down.
At this point, we’re watching and waiting for the carnage to slow before freshly assessing the charts.
What do you guys and gals think? Will we see another fall in the crypto market or will the price of Bitcoin hit the $16,000 mark in October like the infamous 4chan prediction has forecasted?