Who knew Tuesday could bring so much relief from the Monday moanings of Bitcoin traders? After recovering from a 24-hour low of USD 8,040, price has not looked back in any of the global markets.
North America first ensured the recovery remained above USD 8,200 before early European trading pushed prices up to the high of USD 8,495. Some selling pressure took prices down, but now as European markets wind down, price is at a healthy USD 8,360 at 1:21 pm London (CoinDesk).
There is not much else happening with altcoin markets, except that they are now also resuming the arduous climb back up on recovery.
— MX investing (Forex Signals) (@MXInvesting) October 1, 2019
As crypto still picks up the pieces from a grievous week of losses, Binance Research, the research arm of leading crypto exchange Binance, has revealed startling data that puts the crypto crash solely on the shoulders of Bakkt.
We have covered Bakkt a bit in recent times, but we always felt that the advocates of institutional investment into Bitcoin had been overestimating two things: the demand for a financial instrument like Bakkt’s Bitcoin-settled futures, and the inability of big money to enter into Bitcoin investment without the facilitation of a central entity.
When Bakkt launched last week, to a spectacularly underwhelming response from the public, it was, therefore, of little surprise. Indeed, only the experts in public predictions and influencers were flabbergasted by the weak demand for Bakkt products.
And now Binance Research is condemning Bakkt for also causing a massive drop in public sentiment for Bitcoin. In its Global Markets Overview for September 2019, Bakkt’s death on arrival is fingered as the principal event triggering last week’s price tragedy. It summarized:
“Bakkt was touted by many ‘crypto-observers’ as an additional primary channel to bring large institutional flows into cryptocurrency and digital asset markets. It may certainly still do so in the future, as illustrated by the CME futures sluggish start and subsequent pick-up in volumes. Short-term wise though, Bakkt’s disappointing start seems to have been a contributing factor to the recent price decline.”
They now join the likes of JPMorgan and Bloomberg in dismissing Bakkt’s performance, with the latter saying: “It may be that the listing of physically settled futures contracts (that enables some holders of physical Bitcoin e.g. miners to hedge exposures) has contributed to recent price declines, rather than the low initial volumes.”
Stranger still, Bakkt itself seems to agree with all these damning assessments! They do appear a little more aloof about it, though, simply saying that this was merely “price discovery unfolding before our eyes”.
Price discovery unfolding before our eyes
On our second day of operations, totally transparent trading in monthly Bakkt Futures Contracts shows Bitcoin ending the day at $8,560 on 166 lots changing handshttps://t.co/QRpGj5wV4M
— Bakkt (@Bakkt) September 24, 2019
Crypto analyst 100TrillionUSD refuses to blame Bakkt or the other futures products like CME that constantly are said to be at fault every time Bitcoin goes Bearish. Instead, he believes that it is altcoins who are responsible.
Some people blame CME or Bakkt futures for #bitcoin's bear market.
IMO the rise and fall of altcoins is a more likely driver of 2017-2019 btc prices. Btc dominance fell from 98% to 40% … and is now back at 70% (and counting). Bitcoin up 8x since the start of alt experiment 🚀 pic.twitter.com/dC4ZCMuXzc
— Plan₿ (@100trillionUSD) September 30, 2019
But now we move on to the other major reason that a lot of analysts were blaming for the current Bitcoin bear week: the mystery flash crash of Bitcoin hash rate that some news outlets were saying were as high as 40%.
Now, news has surfaced of a huge fire that has destroyed some USD 10 million worth of Bitcoin mining equipment. Social media has been awash with the news, but upon closer inspection, the fire actually only started yesterday.
— Marshall Long (@OGBTC) September 30, 2019
Early Bitcoin miner Marshall Long says that mining company Innosilicon was the victim when its huge data center caught fire. Not very much details have come out, but there is a video making its rounds showing a mining rig still churning out the calculations despite being on fire.
Primitive Ventures founding partner Dovey Wan, who was tagged by long, confirmed that millions of dollars of equipment had gone up in smoke, although no official word has been issued from Innosilicon itself.
As it turns out, natural disasters can take a toll on mining farms, especially given how tight and compact their structures can be to be space efficient. Be it fires or the annual flooding that happens in Sichuan, China, Nevertheless, there is very little evidence that any of these ever impact the overall network hash rate significantly, nor for very long.
And, as pointed out in our previous analyses on BitcoinNews.com, there is a science to calculating hash rate that is as unreliable as it is inexact. So the next time a flash crash happens, don’t panic and hold on to your hats. Those mining rigs aren’t going anywhere any time soon!
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