BAKKT: BEHIND THE PENDING LAUNCH: Faced With An Unexpected Delay, Bakkt Prepares Massive Roll Out And Marketing Blitz

Bakkt has been the talk of the crypto water cooler for nearly six months now. Conversations about it being a “bear market buster” abound, and it just may be. But it has to be approved by the CFTC before that can happen. And as of today, the lights are a bit dim in CFTC offices in Washington, DC – per the US government shutdown.

But that reality isn’t slowing down the inner workings of Bakkt, its staff, and the teams built around the global commodities exchanges controlled by Intercontinental Exchange. The ‘buzzing’ that can be heard amongst those connected to the Bakkt launch is loud and growing. Work is being done and preparations are in full gear.

The clear expectation is that CFTC approval will follow shortly after the reopening of operations at the CFTC following the end of the shutdown. And the Bitcoin initiative known as Bakkt, partnered with Microsoft and Starbucks, will launch like a rocket.

Take a step back and consider the huge venture capital names committed to Bakkt at the moment. A few names connected to their first round of funding read like an All-Star team of sorts: Fortress, Galaxy Digital, Horizon Ventures, M12 (Microsoft’s own venture fund), and a host of others.

The investment is not necessarily a play on Bakkt trading volumes or the price of Bitcoin, but rather on adoption and daily use that Bakkt plans on pursuing. Here is a portion of that case stated by Maria Smith, Vice President, Partnerships and Payments for Starbucks:

“As the flagship retailer, Starbucks will play a pivotal role in developing practical, trusted and regulated applications for consumers to convert their digital assets into US dollars for use at Starbucks. As a leader in Mobile Pay to our more than 15 million Starbucks Rewards members, Starbucks is committed to innovation for expanding payment options for our customers.”

In other words, the play for flagship institutional investors is not the volatility associated with Bitcoin, but rather the real world application of it when you walk into Starbucks and order a Grande Cordusio. With a swipe of a finger and a push of a button, Bitcoin is deployed and used for purchase at one of the largest retail chains in the world.

So what is happening today as Bakkt prepares to launch an entirely new asset into the commodities space?

The Bakkt team is working furiously as they prepare for a marketing and execution blitz that they believe will produce tremendous volumes and attract all manner of institutional clients very, very quickly.

One source familiar with Bakkt’s preparations had this to say about what they expect once CFTC approval occurs:

“Take a close look at the increased public dialogue that Bakkt is having with the crypto and financial community. Whether it is a Medium post by Kelly (Kelly Loeffler, CEO of Bakkt) or social media posts meant to continue to build a Bakkt narrative, the PR and marketing ramp up is preparing for launch and all that comes with it.”

“Once launch occurs you can expect Bakkt leadership to be all over the airwaves and in front of TV cameras preaching the Bakkt gospel. And that can be characterized as the safety, custody, and daily use case ecosystem that Bakkt provides to investors. Kelly is uniquely qualified to tell that story and will be a media darling.”

More color on where Bakkt is headed once approval is finalized from sources we spoke with familiar with the firm. The Starbucks initiative is a 2020 project and will be carefully talked about in conjunction with reps at the behemoth coffee company. ‘Message discipline’ will be important with respect to Starbucks so as not to fall into the trap of overpromising and underdelivering.

At launch much more will be made of Bakkt’s familial connection to ICE and their technology partnership with Microsoft. Those will be highlighted early and often as they are trusted names amongst institutional investors and global investment banks.

Further, you can expect Bakkt to be more an more visible at larger financial and technology conferences of note. Also expect the Bakkt message to be spread in the largest of media organizations like the Wall Street Journal, New York Times, CNBC, Bloomberg and the like. Bakkt wants to build a lock-tight institutional seriousness around digital assets and the safety they plan to provide to investors. They believe keeping messaging to legacy outlets will send that message.

Messaging, optics, partnerships, adoption, safety, real-world use cases, ICE, Microsoft, Starbucks, and ‘more digital asset products to come’. Maybe Bakkt is the bear market slayer we all hope it to be?


BAKKT BONUS: ACQUIRES ASSETS BEFORE APPROVAL: Bakkt Acquires RCG Assets To Bolster Platform Ahead Of CFTC Approval

Bakkt isn’t resting on its parent company laurels and hoping that the ‘largess’ associated with ICE will bring institutional customers by the buckets full. Instead they are continuing to smartly acquire customers via acquisition as well as staff – as per a Medium post made by their CEO, Kelly Loeffler.

Via Medium:

“To advance that effort, I’m pleased to share that we have entered into an agreement to acquire certain assets of Rosenthal Collins Group (RCG), an independent futures commission merchant with nearly 100 years of earning clients’ trust. In December, RCG announced the sale of all its customer accounts to Marex Spectron, one of the world’s largest commodity brokers. As part of that transaction, our aim was to purchase certain valuable assets related to developing our platform. We expect to close the transaction in February, and are excited to welcome members of the RCG team to Bakkt.”

“How does this advance our work? First, it will enhance our risk management and treasury operations with systems and expertise. Other aspects of the transaction will contribute to our regulatory, AML/KYC and customer service operations as we help enable digital asset acceptance by bringing more choice and control to buyers and sellers.”

“This acquisition underlines the fact we’re not standing still as we await regulatory approval by the CFTC for the launch of regulated trading in our crypto markets. Our mission requires significant investment in technology to establish an innovative platform, as well as financial market expertise to deliver the most trusted fintech ecosystem for digital assets.”

It is not entirely clear what Bakkt has really purchased here, other than mention of ‘customer accounts’ in the dialogue above. That would be an interesting move to drive scale upon launch and provide the markets with volume from day one on their platform.

The staff that comes along with the acquisition will be on interest as to how many were acquired, who stays, and who does not.

A note (as we always do when reporting on Bakkt) as to what Bakkt is set to launch, and why it is seen as a potential bear market buster:

“Bakkt is designed to enable consumers and institutions to seamlessly buy, sell, store and spend digital assets. Formed with the purpose of bringing trust, efficiency, and commerce to digital assets, Bakkt seeks to develop open technology to connect existing market and merchant infrastructure to the blockchain.”

“As an initial component of the Bakkt offering, Intercontinental Exchange’s U.S.-based futures exchange and clearinghouse plan to launch a 1-day physically delivered Bitcoin contract along with physical warehousing on December 12, 2018, after receiving CFTC review and approval. These regulated venues will establish new protocols for managing the specific security and settlement requirements of digital currencies. In addition, the clearing house plans to create a separate guarantee fund that will be funded by Bakkt.”

BANK OF AMERICA, WELLS FARGO: RIPPLE ENGAGEMENT: Bank Of America/Wells Fargo Sends Reps To Engage Ripple Leadership; Payment Systems Partnership Discussed

Something is brewing between Ripple Labs and a couple of massive financial institutions. Why and what you might ask? They keep finding themselves in the same rooms together, meet up after meet up, conference call after conference call, and discussion after discussion – all surrounding payment systems that these institutions are considering implementing.

Both Wells Fargo and Bank of America continue to have discussions with Ripple representatives concerning payment processing technology and potential partnerships.

Other banks and financial firms have discussed the same with Ripple: MUFG Bank, WestPac, Standard Chartered, Banco Santander, American Express, Siam Commercial Bank, and SBI. Clearly, Wells Fargo and BofA would be the biggest names and ‘get’ for Ripple Labs as of yet.

Still, from that above group, headliners being Bank of America, American Express, and Banco Santander – who all possess global presences and brands of scale, are partners that any crypto brand would love to add to their client list. Ripple has obviously rolled out the red carpet for these brands and made a commitment to doing whatever is necessary to partner with them.

Ripple continues to make other announcements that have been highlighted over the past couple of months connected to their ever developing payment systems.

Ripple has confirmed the launch of xRapid, a cross-border remittance solution built on the top of Ripple’s proprietary blockchain, last month. The announcement had caused an abnormal bull run in XRP price action, bringing its value up over 100 percent in just a week. The excitement, however, dried off as long position holders began to exit their position on new intraday highs, causing a selloff.

Some of the biggest companies have already nodded to test Ripple xRapid system on their frameworks. These companies include names like MoneyGram, Western Union, Mercury FX, and Cambridge Global Payments. An excerpt from the Ripple website:

“xRapid is for payment providers and other financial institutions who want to minimize liquidity costs while improving their customer experience. Because payments into emerging markets often require pre-funded local currency accounts around the world, liquidity costs are high. xRapid dramatically lowers the capital requirements for liquidity.”

The speculators are expecting these announcements to continue and remain a catalyst for $XRP price action throughout this year. The team announced that it will launch the system in October of last year (which did actually happen), but the actual date of its commencement remains unclear. Unclear or not, having Bank of America and Wells Fargo in the room discussing anything with you is meaningful. Very meaningful.

To the extent that Bank of America, Banco Santander and others will use Ripple’s product line once is it launched and available for daily client and customer transactions also remains to be seen. But there aren’t a dozen cryptocurrency and blockchain firms having these kinds of conversations and building this type of architecture.

In fact, you could count on one hand the other blockchain/crypto firms that are involved, to this serious depth, not only building use case products but actually on the precipice of executing those exact use cases.

While some in the crypto community may scoff at Ripple’s ambitions and the way they go about their announcements, there is real substance involved. Bank of America and Wells Fargo don’t send reps to just anywhere for a nice cup of coffee – they don’t need to based on their reputation and scale.

We expect more and interesting announcements to occur throughout the rest of 2019. Should they rise to the level of actual news and use case seriousness, we will bring it to you.

**To be clear, we are not saying that final conclusions to these talks are imminent and about to be announced. Rather, the inclusion of these firms in any discussions with a cryptocurrency firm is newsworthy. Let’s see how these ‘meetings’ develop and what does, or does not, come of them.

CRYPTO ETF CHATTER: FIDELITY, GOLDMAN SACHS, BLACKROCK: 2019 Is The ‘Genesis’ Of The Crypto Structured Product

At some point, a Bitcoin ETF application is sure to be approved. But that isn’t the talk around water coolers (or via text and social media DM’s) at places like the CBOE, CME, NYSE, and global financial institutions. Each of those organizations is sure that an approval is coming and are preparing the infrastructure for the onboarding of any and all new crypto money.

The talk has quickly turned to the next set of crypto ‘structured products’ that could flood the market in 2019. All manner of ETF’s connected to other cryptocurrencies and ‘baskets’ of alt-coins are coming. And it won’t stop with just ETF’s.

One conversation was illuminating with a source from Gemini: “We’ve got months worth of backlog that is waiting for the first approval. Some of the biggest institutions in the world have crypto products prepped and ready to hit the markets. We expect 2019 to be a year of accelerated adoption.”

A former CME executive echoed those sentiments: “Some of our clients are not only locked and loaded with ETF products, but there are a second set of firms that are set to service and market those products that will indirectly benefit from a succession of crypto-based approvals. This really is the push that seems to be moving the markets as it is on the tip of everybody’s tongues at the moment. That first approval will open the floodgates. In six months the first ‘Bitcoin ETF’ will look like a dinosaur to crypto investors. And the regulation that will be attached to any structured products like this will gather massive amounts of institutional assets.”

A Goldman Sachs source confirmed the 2019 narrative: “2018 has been about building out the legal/regulatory and custody architecture that creates a level of comfort for clients. 2019 will address adoption and investment directly.”

Read the pages of this site or any crypto-based publication over the past month and you can see *clear-eyed* the pent-up demand from all sorts of well-known names, individuals, and institutions, for the right crypto product. Those massive amount of dollars are there for the taking.

First movers in the space will take advantage and reap huge benefits. Names like BlackRock, Fidelity, Goldman Sachs – all of them have current ‘working groups’ connected to digital assets. You can bet that each of them is ready to pounce when the regulatory framework finally takes shape.

Institutions are serious and poised to shovel client cash into cryptos, finally. The moves by Bakkt, Fidelity, ErisX (and by extension DRW), TD Ameritrade, Yale and Harvard endowments over the past 45 days prove that the architecture is nearly finished and lift off is imminent.

There is zero, ZERO chance the above organizations make the moves and spend the capital to build what they are building without a seriously good faith understanding of what regulators will and will not do. That isn’t how ‘high finance’ works.

Not only is a Bitcoin ETF coming, but a flood of crypto-based products will quickly follow.

ETF TALK: COINBASE/BLACKROCK: Coinbase ETF Pursuit With BlackRock Comes Into Focus; Could File Submission ‘Early 2019’

Coinbase and BlackRock have been discussing multiple initiatives and structured products for the better part of 15 months. Not just 2018 or over the summer, as some have reported. Both firms have established working groups that have been ‘passing notes’ that lends strategy and expertise to one another. BlackRock by way of their engagement with regulators and the leaders in establishing the ETF asset class; and Coinbase as the de facto leader in the crypto movement and asset class.

That ‘back and forth’ work has come into focus and a specific structured product is nearing completion and could be filed with the SEC as the calendar moves forward in 2019. This much we are sure of based on industry conversations and ‘on background’ conversations.

What we aren’t certain of, and have been unable to ascertain from those conversations, is the nature and set up of a Coinbase ETF. Will it include multiple coins listed on Coinbase? Will it include more than what is listed on Coinbase? Will it be a largely ‘institutional grade’ ETF with financial barriers to entry that will only allow accredited investors to afford the product? Or will it only be a Bitcoin and Ethereum based product?

Here is a wild card that really piqued our interest – could Coinbase put together a product that includes it’s freshly minted stablecoin $USDC in the allocation of assets within the ETF? Could Coinbase be considering a stablecoin ETF all unto itself?

These are all theories that were postulated and discussed with us over the past month. Whatever the eventual asset mix of a Coinbase ETF submission looks like, it is nearing the finish line and only awaiting the perfect time for submission.

A Long Year Of Research And BlackRock Relationship Building

Throughout the past year, Coinbase has engaged in conversations with BlackRock’s blockchain group in order to leverage the firm’s expertise at launching exchange-traded products. An early pioneer of the ETF market, BlackRock is renowned for its popular, low-cost iShares family of ETFs.

As Coinbase pursues an asset specific crypto ETF, it would join numerous other firms also looking to launch their own, including rival exchange Gemini, Bitwise Asset Management, and VanEck. Several firms have seen their ETF applications rejected by the Securities and Exchange Commission (SEC).

Sources stated that the Coinbase ETF would also likely track a number of coins other than Bitcoin. A Bitcoin ETF has been viewed as a next step in gaining legitimacy as an asset class and could lead to the entrance of more institutional money into crypto markets.

Coinbase’s ETF would need to address the same market transparency and manipulation issues that persuaded the SEC to shoot down 9 ETF proposals. Nevertheless, Coinbase’s conversations with BlackRock support the idea that crypto’s appeal is growing among traditional Wall Street circles.

All well and good and certainly within the scope of establishing a relationship that would favor an ETF approval for Coinbase in the future. But it goes much further than that, and we spoke to a source at BlackRock, on the condition of anonymity who gave us a look behind the scenes as to what is being ‘hatched’ in the Coinbase/BlackRock laboratory:

“The relationship between the two firms has been longstanding, a little more than a year, and has included talks on structured products ranging from credit cards, insurance, ETF’s, IRA’s, mutual funds, hedge funds, and even a possible Coinbase IPO. This isn’t just an ETF story meant to fit the current crypto narrative and what is or isn’t going to happen with the SEC. This is long-term planning with the assumption that approvals will come and adoption will continue to push forward. Coinbase values the breadth and depth of our (BlackRock) brand and has remained cozy and complimentary every step of the way.”

“It is clear that Coinbase aims to be the ‘Fidelity of Crypto’ via its retail operations and focus on compliance, custody, and growth of its institutional offerings. And that type of branding and growth is something that we have immense interest in going forward. Forget about what Larry (Larry Fink, BlackRock CEO) has said publicly about crypto and Bitcoin in particular. That is just smoke amongst a sea of questions marks as to where regulators come down and how the shape of cryptos form around it. At some point, there will be clear language and visibility (November?) and then the two firms could announce several initiatives.”

COULD A COINBASE ETF BE A PRECURSOR TO A $10B VALUATION?

Coinbase just recently executed a $300MM capital raise that valued the firm at $8B and that number created serious buzz in the tech venture capital space. Could a Coinbase ETF approval push that valuation even further? It isn’t that hard to begin connecting the dots as to why Coinbase would choose a partner as revered and lionized in traditional finance as BlackRock for precisely that purpose. In fact, with an ETF approval (or several) Coinbase’s value could stretch significantly beyond the $10B number.

COINBASE REMAINS UNPOPULAR AMONGST CRYPTO DIEHARDS

Coinbase, while somewhat unpopular amongst crypto diehards, has been making choices that seek to establish itself as the first brand amongst the masses that eventually find their way into the crypto space as the regulatory and depth of financial infrastructure builds itself around the globe.

Which makes their relationship with BlackRock all that much more important. BlackRock is THE worlds leading financial institution via the pure mass of assets managed (+6 Trillion). Coinbase is making a very, very shrewd move by keeping themselves close to a firm that wields enormous influence in Washington D.C. and on Wall Street.

If you are going to pursue a serious structured product initiative, there simply is no other firm better suited to assist in navigating the regulatory waters than BlackRock. Whatever your opinion of Coinbase may or may not be, in terms of customer service and as a digital asset exchange, their ability to make shrewd moves based on their brand awareness connected to the bull run of 2017.

BITCOIN BOSS: NOVOGRATZ: Take A Look At The Crypto Investments Made By The ‘Buffet of Bitcoin’ Over The Last Year

Michael Novogratz is quickly becoming the ‘Oracle of Bitcoin’; to borrow a phrase from traditional finance and the worlds most successful investor, Warren Buffet. It seems that wherever and to whoever Novogratz floats his ‘pixie dust’ (aka crypto venture capital) the masses are sure to not only take notice but quickly deem the investment a crypto move of genius proportions.

But those masses aren’t wrong, and Michael Novogratz has found himself on the right side of the digital assets ledger time and time again. For reference, let’s take a look at the investment he’s made in just the past six months:

  1. The just-announced increased investment in his own firm Galaxy Digital.
  2. A partnership with his firm, Galaxy Digital, and Fidelity Digital Assets is announced.
  3. A strategic investment in Hut 8 Mining.
  4. A strategic investment in Bakkt.
  5. An investment in BlockFi, a lending facility for digital assets.
  6. An equity position in Caspian, a digital asset management solution.
  7. A strategic investment in Wax Express Trade, a digital gaming payment/trading system.
  8. An investment in High Fidelity, a VR blockchain project.
  9. A ‘lead investor’ equity stake in Alpha Point.
  10. Partnering with Bloomberg to create the Bloomberg Galaxy Crypto Index (BCGI).
  11. A co-investment with Goldman Sachs in custody service BitGo.

And we are almost certain there are more that haven’t been announced – and we probably even missed a couple. But the above list is remarkable and proves the ‘Buffet of Bitcoin’ moniker. When Michael Novogratz talks about crypto, digital assets, blockchain, use cases, or any other such crypto ecosystem buzz phrase you need to listen – and listen intently.

**Most of you reading this are acutely aware of Novogratz’s crypto prowess, but may not know his traditional finance history equally as well. So some crib notes regarding his work up to this point: Michael Novogratz is an ex-hedge fund manager, formerly of the investment firm Fortress Investment Group. Prior to joining Fortress, he was a partner at Goldman Sachs where he spent much time abroad including leadership roles in Asia and Latin America.**

Goldman, Fortress, and now quite possibly the most powerful financial firm in crypto, Galaxy Digital. That is a resume’ that commands respect, even with the circumstances that surrounded his exits from both Fortress and Goldman. Exits that were predicated on risk-taking that now serves Galaxy Digital perfectly.

This quote from the Bloomberg BitGo announcement yesterday adequately describes the direction and strategic thinking (common sense thinking) behind most of Galaxy Digital and Michael Novogratz’ investments:

“If you were investing in any other asset class, you’re probably not worried about the asset just disappearing — but this one, people still have that fear,” Mike Belshe, BitGo’s co-founder and chief executive officer, said in an interview. For cryptocurrencies to reach their full potential, “we’ve got to conquer that.”

Problem-solving, married to the concepts pressing digital assets forward are what make up Novogratz’ investment philosophy – at least that is what the above investment roster indicates. Custody, data, trading platforms, warehouse facilities, mining – these are all digital versions of another ‘Oracle’ (Warren Buffet) who’s made a few bucks over the years. Infrastructure and hard assets, so to speak.

In crypto, it is becoming increasingly clear that the concept of following the money will eventually pay off big. Galaxy Digital and Michael Novogratz are leaving breadcrumbs all over the digital assets trail, and you’d do well to chase them, picking up every crumb along the way.

DRAPER DIGS IN: Doubles Down On Bitcoin Price Prediction, 225,000 By 2022

Tim Draper could be Bitcoin’s leading evangelist. And any evangelist worth his salt not only reveals himself as a true believer but acts as such in public and private. Tim Draper revels in doing just that at every turn and stated again that Bitcoin will reach astronomical price levels over the next 42 months.

The Bitcoin [BTC] enthusiast and entrepreneur, earlier predicted that Bitcoin will reach a value of $225,000 in 2022. He mentioned this prediction in his book and stands by it.

In sticking to his prediction that Bitcoin will soar to $250,000 by 2022, he’s effectively carved out the high ground amongst other well-known crypto bulls. At one of his latest conference appearances, he spoke about the potential in technology regarding the banks and venture capital. He spoke about his hopes about cryptocurrency, the new world order, and his bullish beliefs about the token, Bitcoin [BTC].

He also believes that fiat currency will lose its value, he said:

“So, you’ll go in and try to buy coffee with fiat and the barista will laugh at you. Because there is so much more friction with fiat currency than there is with cryptocurrency. And I think you’ll be able to buy it with Bitcoin, Ether, or Bitcoin Cash.”

(**more to come about the above concept later today and throughout the week in reference to Bakkt and their pending ‘pipes’ connected to $BTC).

In 2014, he made a purchase of 30,000 BTC when it was trading at $650 at a public auction. However, it was seized by the US authorities from Silk Road.

And a reminder that Tim Draper doesn’t mind getting all up ‘in his feelings’ about Bitcoin by doing his best old man Eminem impression on cryptocurrency:

“Wherever you are,
Thank you for Bitcoin, the blockchain and more
You started this snowball from the top of the hill
And now it’s pervasive
It’s the people’s will
It’s the people’s will
We want a new world order
We want to play across the border
Just wanna be a Hodler
on my Bitcoin hustle
on my Bitcoin hustle
on my Bitcoin hustle
Yeah!
Get your hustle going
Flex that crypto muscle
Yeah!”

LOL! Tim is going to Tim. The enthusiasm can be contagious and he remains the worlds foremost ‘Crypto Evangelist’ at the moment – displacing other high profile personalities. Of course, a middle-aged white guy constructing a rap about a significantly white/male phenomenon seems a bit much.

Still, wherever he goes, whatever he says the crypto world is listening. And holding on to his $225K bitcoin prediction for dear life.

TRADERS: BULL RUN: 5 Reasons A Legitimate Bull Run Is Coming (and soon)

The crypto bear market has lasted nearly 11 months, and for all intents and purposes, seems to be accelerating at the moment. Bitcoin logged another leg down overnight and this morning; crypto sentiment seems to be at 2014/2015 levels. Instead of bullish posts being all the rage, the latest crypto twitter meme seems to be rage tweets claiming portfolio destruction and leaving the space altogether.

Sounds perfect – to several tenured crypto traders and crypto hedge fund managers. The screeches and audible pain that is emitting from crypto ‘hodlers’ and traders sounds like the sentiment that occurs just before a turn and the makings of a quiet bull market floor forming.

In discussions with several traders and a couple of crypto hedge fund managers over the weekend, we gathered five good reasons why the next crypto bull run could be upon us. Let’s take a look:

  1. Institutional infrastructure breadth and depth: Beyond individual stories about Goldman Sachs, Fidelity or Bakkt – two hedge fund managers spoke extensively about the breadth of institutional involvement in crypto that is on its way to the markets. Goldman Sachs, Fidelity, DRW and TD Ameritrade (ErisX), BlackRock and Coinbase, Nasdaq, Bakkt and the NYSE, and on and on and on.
  2. OTC Markets are quietly robust: One trader told us that the volume on the OTC markets is at a turning point and volumes have recently spiked higher; and not for sellers, but for buyers. Smart money sees the 2018 bear market as an opportunity to buy ‘digital gold’ on the cheap and stash it away for a couple of years. If traditional markets weaken any further the OTC buyers dynamic will only increase and push Bitcoin prices higher.
  3. The SEC just gave muted guidance (via enforcement) that should embolden the tokenization movement: The latest enforcement actions by the SEC, scolding two separate ICO’s, provided further guidance to the tokenization movement and its actors. The short version is essentially this ‘ICO’s aren’t illegal, and we really don’t mind them, just check in with us, pursue registration, and you should be good.’ The ICO enforcement actions taken late last week amounted to small fines given how much those ICO’s raised. A virtual slap on the wrist. And neither announcement claimed fraud of any kind.
  4. Garbage alt-coins are being destroyed: One crypto hedge fund manager discussed Verge ($XVG) as an example of the kind of waste that needed to be burnt out of the ecosystem for the next bull run to begin, “…a token like Verge, built on nothing more than vaporware, hype, cringe partnerships, and stickers on rented lambos are what needed to go away before capital could consolidate and find it’s way back to the likes of projects that are serious and legitimate. Bitcoin, Ethereum, Monero, Stellar (and others) – these are teams that are legitimately attempting to build something that lasts and you can see money flows moving in that direction.”
  5. Bakkt arrives on January 24th: Bakkt brings serious force to the crypto markets by providing Tier 1 institutions the ability to accumulate and trade Bitcoin no differently than they trade gold, oil, natural gas, silver, copper, etc. Trading Bitcoin globally on the ICE exchange networks is 10x the size of CME and CBOE futures trading. The daily gold futures volume on global exchanges is routinely better than $200B. Yes, that is the DAILY volume. DAILY. The late 2017 bull run was somewhat fueled by the Bitcoin futures ramp up on the CME and CBOE. Expect a similar market reaction to Bakkt.

A look back to how some accomplished traders view Bakkt and its ability to curtail the bear market:

“Nothing else on the horizon comes close to what Bakkt will mean for Bitcoin. The depth and breadth of the ICE (Intercontinental Exchange) network and exchange ecosystem means that adoption/trading volumes will skyrocket overnight. The same pipes and structures that allow Goldman, JPMorgan, Morgan Stanley, among a horde of others, to trade billions in commodities like gold, silver, soybeans, and corn; will be the same architecture used to trade Bitcoin.”

“Think of it this way…with the custody and ‘warehouse facility’ solved inside of Bakkt’s infrastructure you have solved the final issue that institutions have been clamoring for in the digital asset space. Their Bitcoin transactions and investments are ‘safe’ via the warehouse facility, and the ability to go claim their Bitcoin straight from the warehouse should they allow their position to mature to that point.”

“Rather than ‘physical’ Bitcoin per se, you are getting access to Bitcoin being housed in an uber protected, heavily secure facility that will hold the digital asset as the backstop for Bitcoin. That is what the Novogratz’ of the world and Goldman and JPMorgan have been clamoring for.”

“While it would be interesting if Bakkt got the press it deserved, there really isn’t a single ‘name’ banking institution that could accompany them in a headline. And that is precisely the scale of the Bakkt story. The ramp up and volume with be enormous and lightning fast. Within months you will have billions of dollars in institutional cash running through Bakkt’s system, buying and selling Bitcoin.”

“This is ultimately the solution that the biggest players (within banking) want and need. And this move furthers the narrative of Bitcoin as a ‘store of value’ or ‘digital gold’.”

And a reminder regarding the reactions crypto hedge fund managers had to the Fidelity ‘digital assets’ initiative several weeks ago (that aims to compete with Bakkt):

“The rumors out there stem from Fidelity passing on taking a stake in Bakkt and then have run amok from there. They’ve been just as secretive about their build as Bakkt was for nearly two years leading up to their announcement. All we know is what we hear from a couple guys that work at Fidelity, but even that is vague and a wink and a smile. But as we see stuff leaked via the media in some way it makes sense that they would scale up. Bakkt has all the institutional pipes, but Fidelity has that same access, but a massive retail name that can tap millions of customers.”

“The real intrigue here is the rumor that Fidelity considers themselves to be crafting a real competitor to Bakkt. That is a mouthful if you ask me. Bakkt is leveraging fifty plus years worth of exchange infrastructure to establish Bitcoin as a standard and then offer products that evolve from there. Fidelity is said to be further along in the way they plan to leverage that same architecture. If that is true, and that is a big if, it only furthers adoption, and the crypto ecosystem wins. Still, lots of chatter about what could come from a name like Fidelity.”

Even Bank of America keeps grabbing crypto custody and blockchain patents by the armful:

“Describing its place and necessity in the future of financial services, the application reads, “As technology advances, financial transactions involving cryptocurrency have become more common. For some enterprises, it may be desirable to securely store cryptocurrency.” The Bank of America began its development of this online cryptocurrency vault system in 2014. So while top leaders at Bank of America have publicly derided Bitcoin and cryptocurrency in general, actions speak louder than words. And they are preparing for the rollout of custody solutions, structured products, and payment systems. Book it.”

A bull run is coming…and if tenured traders are to be believed, it is just around the corner.

BREAKING: COINBASE AND WEALTHFRONT: Robo-Advisor Disrupting Wall Street Partners With Coinbase To Offer Clients Token Access

In a press release from Wealthfront earlier today, the leading robo-advisor platform has struck a deal with Coinbase to offer clients (read: millennials) access to digital assets such as Bitcoin, Ethereum, and the coming wave of tokens that Coinbase has signaled they plan to list over the next year. 

The continued cross-currents between both Wall Street and the digital asset economy are undeniable at this point. All manner, size, scale, and reputation of traditional finance based exchanges and broker-dealers are set to offer some sort of access to digital assets and tokens. It isn’t slowing down, rather the pass is picking up.

Via Wealthfront: 

“Today, we’re excited to announce you can now track your cryptocurrencies by connecting your Coinbaseaccount to Wealthfront! We’re especially excited because this has been one of our clients’ most requested features.”

“You have always been able to connect a wide variety of account types and asset classes to our Path advice engine—from bank and brokerage accounts to real estate, mortgages, and student loans. But we know many of you like to dabble in other innovative financial products, like cryptocurrencies. So now, we make it possible for you to add information about your cryptocurrency holdings in your Coinbase account to Wealthfront to get a more holistic view of your financial picture. And even more importantly, we factor that information into your free financial plan.”

Rather than offer the ability to trade cryptocurrencies directly from Wealthfront, they’ve created a specific API that allows clients to link their Coinbase account to their platform and be visible on their statements/app/desktop. The same functionality exists for other accounts at Fidelity, Bank of America, Vanguard and others. 

Still, another move of scale forward for the digital assets ecosystem.

BAKKT: FUTURE PRODUCTS: Bakkt Foreshadows ‘Future Crypto Products’ In Dialogue; Bullish Hopium

As if we needed another reason to continue to anticipate the launch of Bakkt. In a late Sunday tweet Bakkt foreshadowed the future of their ambitions with the following line:

“…which could open the door for other products around crypto.”

This from a tweet at 4:42 PM. Deconstructing the backstory on ‘other products’ is the key here. Clearly, Bakkt doesn’t aspire to simply create and trade, ad infinitum, bitcoin futures and bitcoin futures alone. As competitors such as Nasdaq and ErisX push forward with multiple cryptocurrencies and futures that will be traded at their respective launches, Bakkt won’t be left behind.

To get a bit more clear-eyed on what other products Bakkt may be talking about that will come from a more orderly price book from Bitcoin take a look at the gold futures markets, spot markets, etc. What type of products has evolved from the ‘physically deliverable’ gold markets dominated by ICE, the parent company of Bakkt?

Orderly gold markets trade better than $100B worth of the commodity per day. The products that have been born from that type of volume have been the following:

  • Physical gold is readily available to the public from all manner of sources.
  • Gold ETF’s have been approved across the board and trade on several exchanges.
  • Gold mutual funds have also become mainstream.
  • Gold derivatives are traded amongst commodity exchanges.
  • Gold futures are also traded across multiple commodity exchanges.
  • Gold options.

**The collective trading in the above products approaches $500B on a daily basis.

Can anyone guess who manages the largest gold-based ETF’s in the world? Anyone? Anyone? BlackRock. Yes, that BlackRock – the worlds largest asset manager. And there just happens to be a story or two out there that connects BlackRock to Coinbase as the two comingle their efforts on potential crypto ETF products.

Bakkt aspires to be the foundation on which firms like BlackRock, State Street (SPDRS), Invesco, Vanguard, VanEck, and Deutsche Bank create Bitcoin and digital asset ETF’s. Collectively the aforementioned firms manage nearly $4T in ETF assets. FOUR TRILLION.

So it makes a bit of sense for Bakkt to have an interest in processing the type of digital asset volumes connected to an ever-expanding ETF ecosystem.

And this is the reason that Nasdaq, Bakkt, ErisX, and Fidelity have rushed into the custody and trading markets for Bitcoin and other large market cap digital assets. The fees and profits on ETF’s, mutual funds, options, and derivatives are in the 10’s if not 100’s of billion dollars a year.

Would Bakkt, Fidelity, and Nasdaq really announce large-scale crypto infrastructure if the smartest people in those firms have yet to do extensive due diligence on the expected profits? And those expected profits far outweigh the risks involved in digital assets? Of course, they have put the scales to it and their eyes have widened at the expected and potential profits.

Take a look at some commentary directly from Bakkt’s CEO, Kelly Loeffler regarding where Bakkt is headed – and we will highlight specific phrases that point to significantly more than just Bitcoin futures:

“Our goal is to make digital assets more liquid, trusted and accessible; allowing meaningful innovation to follow. Many in our space are working toward this objective.”

“By virtue of passporting ICE Futures U.S. and ICE Clear U.S. into other jurisdictions outside the U.S., institutions operating on a global scale can better serve their customers. Bakkt’s first contracts will be physically delivered Bitcoin futures contracts versus fiat currencies, including USD, GBP and EUR.For example, buying one USD/BTC futures contract will result in daily delivery of one Bitcoin into the customer’s account. This aspect of physically delivery adds to the utility of Bitcoin, beyond simply trading.”

“While there are many aspects of Bakkt that we’ll continue to develop and share, our initial focus is supporting regulated institutions in serving customers in this emerging asset class. The foundation on which we are building our solutions for buying, selling, storing and spending digital assets is not a piece of Italian Carrera marble, like the statue of David, but is built upon the time-tested, regulated futures markets — which have advanced markets ranging from coffee to gold for hundreds of years.”

“Key to cryptocurrency’s success is a trusted market price. We are working to create a regulated for of price discovery, which could open the door for other products around crypto.”

Again, the implications here over the next three to five years are enormous. A regulated and orderly market for large-cap tokens will turn a $150B – $200B market capitalization ecosystem into a $1T – $2T industry of scale. If the gold markets are any indication of what lies ahead for digital asset structured products and daily trading volumes – fill your bags right now.

Don’t be blinded by the pain of a bear market. Bakkt, Fidelity, Nasdaq and other global firms of scale are building and loading up. Shouldn’t you be?