Bakkt’s monthly futures volume on Tuesday skyrocketed to 1,061 contracts. That number is 112 contracts short of ICE-operated platform’s all-time high of 1,183 contracts. The sudden volume surge came to the surprise of the crypto community. The last time Bakkt’s monthly futures volume spiked was on Oct. 25, the day bitcoin pumped over 18%.
On Tuesday, however, bitcoin’s price action was far from exciting. The dominant cryptocurrency traded in a narrow range between $9,169.84 and $9,474.89. Many crypto traders found it shocking that institutional investors bought over $10 million worth of bitcoin monthly futures contracts. Nevertheless, this may indicate growing institutional interest, which is bullish for bitcoin.
Following the launch of Bakkt, volume of the bitcoin futures monthly contract was far from impressive. Actually, to say that the ICE-operated company started slow would be an understatement. From Sept. 24 to Oct. 22, volume fluctuated between $1.9 million and $200,000. Many were already be calling the platform a flop.
Then on Oct. 23, Bakkt’s monthly futures volume rose to $4.8 million. Little did we know that it was the prelude to a mega pump of $10.3 million worth of bitcoin monthly futures contracts.
Since Oct. 23, volume never went below $2.5 million. It appears that the ICE-operated platform is starting to generate serious institutional interest. Tuesday’s $10 million worth of bitcoin monthly futures contracts supports this view.
In technical analysis, there’s a principle that says volume precedes price. That’s why the sudden increase of volume on Tuesday prompted us to ask analysts whether they believe this is bullish for bitcoin.
Alex Kruger, economist and trader, spoke to CCN about Bakkt’s unexpected volume spike. When asked whether it is bullish for bitcoin, the trader replied,
Mr. Kruger then pointed us to one of his recent tweets about the development.
The owner of the Wyckoff Stock Market Institute, Todd Butterfield, is also bullish on the number one cryptocurrency. However, he believes that it is possible that bitcoin will take a quick pullback before resuming its uptrend. The trader told CCN,
I think bitcoin is preparing to move sharply higher. Worst case, we have a quick spike down to $8,600 to force out the weak longs and get some people short. Then we get a sharp reversal higher once again.
Popular Elliott Wave technician BenjaminBlunts also sees the exact same scenario playing out. The Elliottician said,
I think the bottom is in. But, I also think we will pullback to around 8600 before continuing the bull run to shake out all the people who FOMOed the pump the other week.
It is astounding how top traders have the exact same play and the exact same level in mind. Nevertheless, it appears that bitcoin is in great shape. Institutional players are probably seeing the strength of bitcoin’s uptrend and they’re starting to scale in. When viewed from this perspective, the uptick of Bakkt’s monthly futures contracts doesn’t look so surprising.
Disclaimer: The above should not be considered trading advice from CCN. The writer owns bitcoin, Ethereum, and other cryptocurrencies. He holds investment positions in the coins but does not engage in short-term or day-trading.
This article was edited by Sam Bourgi.