A record-high Bakkt Bitcoin delivery exposes institutional frenzy for BTC, or the virtual currency of the Silk Road. The announcement from a major Chinese bank that they would start the trading ofBTC (and other virtual currencies) on their internal stock exchange was quickly followed by news of the launch of what could be the largest and most widely used stock market in the world.
One is reminded of central banks all over the world beginning to trade FX back and forth as part of their macroeconomic policies. In fact, one has to go back to the Great Depression to see this pattern at work. Since the US dollar had been depreciating in value against the rest of the world’s currency, central banks began investing in other currencies, particularly the US Dollar.
Now, with a record-high Bakkt delivery, it appears that the Chinese authorities are following the same path. If this trend continues, the US dollar will be depreciating against every other currency, and as such a devaluation in the US dollar will increase the value of the Chinese Yuan, or other Chinese currencies. This will further make it more difficult to hold the Chinese Yuan as a reserve currency in relation to the US Dollar, which means more opportunities for investors to purchaseBTC.
Indeed, this makes sense because a decline in the value of the Dollar will mean that investing in BTC becomes very attractive and it will be a good time to buy. But, we must also keep in mind that these events do not happen automatically. The Chinese government needs to decide whether or not they want to ride out the price decline or whether they would like to ride it out and allow the value to continue to rise.
It is possible to predict a future price increase for BTC based upon the recent news of the Silk Road’s impending release of the first batch ofBTC. However, predicting the timing of this price increase is not quite as easy as it seems, and many analysts are calling it an over-reaction. The current price of BTC has dropped considerably since the announcement and if you follow the news closely, you will note that the news was released at the exact time when the Chinese stock market was opening for business. Many analysts are speculating that the price ofBTC may actually continue to drop further once the news is announced, perhaps even dropping below the level where it closed last Wednesday.
Indeed, if this trend continues, then investors should expect a big run on BAKT (as the demand for the virtual currency will continue to rise. Therefore, the best thing to do is get in before the price starts to tumble.