Following one of its biggest bull rallies in history to $19,500, Bitcoin (BTC) is set to end 2018 with an 80 percent drop from its all-time high.
As Bitcoin enters 2019 with a bear market status having suffered a steep sell-off in December, what can investors expect in the first two quarters of 2019?
Several Catalysts on the Horizon For Bitcoin
In the first quarter of next year, Bakkt, a cryptocurrency liquidity provider and exchange operated by the New York Stock Exchange’s parent company ICE, is set to launch a Bitcoin futures market.
In late 2017, CBOE and CME, two major futures market operators in the U.S., launched strictly regulated Bitcoin futures markets. But, they both are cash-settled markets that have minimal impact on the short-term price trend of digital assets.
According to Jake Chervinsky, a government enforcement defense and securities litigation attorney at Kobre & Kim, Bakkt is a physically settled Bitcoin market that guarantees the delivery of BTC to its investors.
The Bitcoin-settled market of Bakkt could have a significant impact on the price of the dominant cryptocurrency as it will have an effect on the circulating supply of BTC.
Also noteworthy is the fact that Bakkt will custody and deliver real bitcoin. That means institutional inflows would reduce supply and thus (maybe) increase price too. This is different from other regulated futures markets like CME and CBOE, which only deal in cash-settled futures.
The potential effect on the Bitcoin price by Bakkt wholly depends on the demand from U.S. customers the company sees in the first several months of 2019.
Although Bakkt has already become a major catalyst for the recovery of BTC in the minds of many investors, the demand for Bakkt still remains uncertain, and it is possible that due to the recent sell-off, the market does not see a level of interest it initially expected.
It is still too early to determine whether Bakkt could contribute to a meaningful increase in the price of BTC in the mid-term. But, the launch of the first physically-settled Bitcoin futures market in the U.S. is positive for the sector and for the institutionalization of crypto assets as an asset class.
Nasdaq is also set to launch a Bitcoin futures market following the launch of Bakkt, around the time the U.S. Securities and Exchange Commission (SEC) will announce its decision on the VanEck-SolidX Bitcoin exchange-traded fund (ETF) filing.
Will an ETF Happen?
As pro-crypto SEC Commissioner Hester Peirce said, the approval of a Bitcoin ETF could take days or years, and investors should not wait on it.
“Don’t hold your breath. I do caution people to not live or die on when a crypto or bitcoin ETF gets approved. You all know that I am working on trying to convince my colleagues to have a bit more of an open mind when it comes to [crypto]. I am not as charming as some other people,” she said.
Regardless of the ETF, the price of BTC will continue to move based on a cycle. In 2018, the industry has seen some of the most positive developments in recent years, yet it had minimal impact on the price of the asset.
Historically, the asset has taken about 62 weeks on average to recover from a major correction. Analysts generally expect Bitcoin to undergo a gradual recovery by the end of the second quarter of 2019.