The bitcoin and cryptocurrency market suddenly went into meltdown today, with the bitcoin price dropping over 10%–just after the closely-watched Bakkt crypto platform went live.
Bitcoin’s major rivals, including the likes ethereum, Ripple’s XRP, litecoin and bitcoin cash, all recorded even heavier losses, falling from 15% to 22%.
The sudden sell-off, which wiped $20 billion from bitcoin’s value and a further $5 billion from the combined value of the wider crypto market, was put down to the muted reaction to the launch of the hotly-anticipated Bakkt bitcoin and cryptocurrency platform.
Bitcoin cash led today’s downturn, losing a whopping 22% of its value, while ethereum lost 15%, litecoin fell 14% and Ripple’s XRP dropped 10%.
Bakkt, an Intercontinental Exchange-backed bitcoin and crypto platform, went live on Sunday night after being unveiled to much fanfare last year–boasting computing giant Microsoft and coffee chain Starbucks among its partners.
Total trading of Bakkt’s hyped “physical” bitcoin futures, meaning traders and investors are not able to sell more bitcoin than they actually have, came to just 72 bitcoin by the end of its first day, compared to over 5,000 bitcoin traded on the first day of CME’s cash-settled futures.
“The disappointing Bakkt opening signals to the crypto community that institutions are less ready to invest in bitcoin at scale than was supposed, which means the price was probably too high and due for a correction,” said Alex Mashinsky, chief executive at crypto lending company Celsius Network.
“What we’ve just seen is short sellers and momentum traders piling on to make things worse, and now here we are back at support.”
Other bitcoin and crypto market watchers were more upbeat, pointing to Bakkt’s widely telegraphed launch as reason for bitcoin’s poor performance.
“It should be noted that the launch of these futures was one of the main narratives that spurred on the massive bull run at the start of the year, so what we’ve got here is a classic case of buying the rumor and selling the news,” eToro’s senior market analyst Mati Greenspan wrote in a note to clients.