The price of bitcoin dropped 15 per cent against the United States dollar by the close of trading on Tuesday, making it the lowest level in four months, and the first time below $8,000 since mid-June.
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The dip follows the listing of the Bakkt Bitcoin futures contracts on Monday by Bakkt, a cryptocurrency platform affiliated with the Intercontinental Exchange Inc, the owner of New York Stock Exchange (NYSE).
Bakkt plans to solve cryptocurrencies’ age-long challenge of sufficient transparency and regulation for individuals who want to use them in retail purchases.
Bitcoin, the world’s largest cryptocurrency by valuation, has persistently failed to attract more payment users, mainly because of its high volatility. Analysts have said that the ICE’s futures could make it easier for merchants to protect themselves from swings in bitcoin prices. The ICE -0.32 percent Future allows traders to bet on whether an underlying market such as oil, gold, stocks or currencies will rise or fall. ICE is owned by the NYSE.
“We’re starting with the basics: instilling trust through regulation and secure custody, and deploying products that are transparent and regulated to support their adoption,” said Kelly Loeffler, CEO of Bakkt in a statement. This commitment is reflected in our mission at Bakkt: Expanding access to the global economy by building trust in and unlocking the value of digital assets.”
According to the Wall Street Journal citing a spokesman from Intercontinental Exchange Inc. , trading in the new bitcoin futures began late on Monday, with the first trade at $10,115.00, in line with the current price of bitcoin.
Despite the much-anticipated launch, investors failed to pull the price of bitcoin from its downward trajectory on Tuesday. One of the reasons, according to analysts, is that the price action on bitcoin is still driven by short-term technical analysis. In other words, speculators are still in the majority of decision making in the market.
“Because crypto is still dominated by short-term-focused traders, these telegraphed narratives often become self-fulfilling prophecies,” said Jeff Dorman, chief investment officer at Arca, a Los Angeles-based asset manager that invests in cryptocurrencies, in an interview with Bloomberg.
