It has been one week since the opening of the Bakkt futures exchange, which many analysts and investors have claimed was a colossal failure and that it lead to the downfall of all things crypto in its subdued wake. As for the folks that prefer not to overreact at inconsequential news, these wiser voices have noted that no futures exchange opens with a bang. There is too much infrastructure in the background that must be made right before any real trading can begin to shape the market.
Another subset of these people has also stated that the real benefits of active futures exchanges are to enable true price discovery in the marketplace. From their perspective, the market is acting, as it should. The “fair value” of Bitcoin was far too high in their estimation and needed to be brought down a notch. From its $3,130 bottom established in late December, it has achieved a return in excess of 250% to date, far greater than any traditional equity issuance and, perhaps, too great a one, if you buy into this logic.
This argument goes on to say that the so-called Bitcoin “premium”, the previous amount paid in excess of its “fair value” in order to buy into its potential parabolic future, was due to pent-up institutional demand from Big Players that would only join the fray when Bakkt was up and running. It remains to be seen if this “institutional herd” will appear. The trickle of orders into Bakkt could always grow to a torrent, but no one is expecting such massive floodwaters anytime soon.
While all this moving and shaking was going on with Bitcoin, its altcoin brethren were also pulled into the maelstrom. Many suffered greater fates, but over the past month, the dominance of Bitcoin as a market share leader has been in decline. From nearly 72% and estimates that 90% might be in the cards, BTC has fallen to 67.8%. For this reason alone, the chant that “Alt-Season is coming” has been reverberating through the halls of the crypto-verse for weeks.
One particular analyst on Twitter that goes by the handle of “888Velvet” now believes that the stage is set for a real sea change in how cryptos other than Bitcoin are viewed by the investment community. Per NewsBTC: “I’m taking some time off CT (another way of saying partial retweet) to cut the noise, focus and re-evaluate. If everything goes to plan we’ll see an #Altseason in october, but most important is $BTC’s next move by the end of this week! This week will be the most important week for the future of #Crypto! Good luck!”
This rather strange forecast is based upon a charting of Bitcoin’s dominance, and then applying Fibonacci ratios to recent peaks and valleys of the statistic. According to this analysis, Bitcoin’s dominance is sitting precariously atop a 78% retracement. One little nudge, and Alt-Season would be the news in October. In other words, BTC would have to continue its current collapse, in order for other altcoins to prosper. There are quite a few analysts that see Bitcoin falling to $6,300 as the next step down from $8,000, where it presently sits, but the “herd” is waiting to see what happens this week.
Tony Spilotro at NewsBTC, however, offers this rebuttal:
Bitcoin collapsing could cause so much fear and uncertainty in the market, that altcoins fall even further than the new bear market lows many of them are already setting over the past week or so as Bitcoin began to break down from its multi-month trading range. The crypto market fear and greed index is still above recent lows, so there is still hope in the market left for a rebound.
Put another way: So goes the Bitcoin narrative, so goes market sentiment, and so goes market sentiment, then so goes the value of Bitcoin. This week will surely be a critical crossroads for the Bitcoin narrative and for the Bitcoin faithful.