New data shows that institutional interest in bitcoin and cryptoassets is on the decline, despite the price rallying from last year’s lows.
Bakkt's Slow Start
Crypto enthusiasts and retail investors have, according to some analysts hung on news of institutional investment for the last year as a way to take the industry to new heights. However, it appears interest from banks and large financial institutions is on the decline.
Bakkt, the highly anticipated bitcoin custodial and derivatives trading platform, was viewed pre-launch as a potential gateway for institutional investment. Despite the early hype, the exchange kicked off to lackluster results, generating around $5.8 million in volume through its first week of trading.
Bakkt's first week volume was approximately $5.8 million.— Alex Krüger (@krugermacro) September 29, 2019
It managed to get traders interested in 5 bitcoin worth of its physically delivered daily futures. Quite the successful launch.
The platform’s launch was so underwhelming that Ikigai Asset Management founder Travis Kling told Yahoo Finance it contributed to bitcoin’s price fall from $10K to $8K in the final weeks of September.
The research division of leading crypto exchange Binance came to a similar conclusion, writing in their monthly report,
One possible reason, explaining Bitcoin’s price drop, could be the general indifference towards the much-hyped release of Bakkt, as BTC prices dropped over $1,000 a day or so after trading began.
Institutional Interest Declining
While many analysts believe Bakkt’s slow start will prove transient in the long run, other data suggests that institutional interest in cryptoassets may be falling short of expectation.
Crypto analytics firm The Tie, which measures market sentiment, pricing, and on-chain data, found that institutional interest in headlines has plummeted over the last several months. The firm indexed more than 85,000 publication headlines to compile a chart on the industry’s portrayal of large capital investment,
Mentions of institutional interest in Bitcoin in news headlines have plummeted to a 2019 low after seeing significant growth throughout the summer.— The TIE (@TheTIEIO) October 2, 2019
Data from over 85,000 unique publication headlines collected since October 2017. pic.twitter.com/3JqHEpIAF8
Market Sentiment and Tweet Volume
The Tie co-founder Joshua Frank also appeared on BLOCK TV Oct. 3 to explain that market sentiment and retail interest in crypto-assets, particularly altcoins, is on the decline.
Bitcoin has also seen a drop in social media conversations. According to Frank,
Tweet volume for these [altcoins] is down eighty to ninety percent, which signifies that retail interest within those assets and within crypto more broadly tends to be waning. We were seeing about 80,000 bitcoin tweets a day at the end of 2017. That number has since dropped to 28,000. So it’s a very significant drop.
Frank went on to give his take for investor sentiment across the marketplace,
"The data doesn't look good for anything right now" - @TheTIEIO Co-Founder, Joshua Frank, talking about the alarm bells ringing in crypto sentiment data.— BLOCKTV (@BLOCKTVnews) October 3, 2019
See full report: https://t.co/ihsR5xV7Mr pic.twitter.com/hYdrb4nQp0
Despite waning market sentiment and institutional interest, crypto-asset futures trading appears to be on the rise. Bakkt may have had a slow start, but Binance’s recently launched futures product generated more than $170 million in swaps on its first day. Since launching in early September, the platform has compiled nearly $2 billion in weekly derivatives trading volume.
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