Bakkt: the first BTC company sinks on the Stock Exchange

Bakkt, back in 2018, was the first traditional financial company to want to offer derivatives on the Stock Exchange to allow indirect investments in BTC.

At the time, there was still no spot Bitcoin ETF in the USA, and Bakkt, which was owned by the New York Stock Exchange (ICE), wanted to offer something similar. 

In December 2017, the first traditional futures on the price of Bitcoin landed on the Chicago exchange (CME), but the times were still very premature for more advanced instruments. 

Bakkt: the problems for the BTC-oriented company

Bakkt managed to go public only in 2020, which is four years before the listing of U.S. ETFs on BTC spot. 

In short, it took two years from the moment it announced its intention to bring to traditional exchanges assets that would allow an indirect investment in Bitcoin to when it actually managed to list its shares on the New York Stock Exchange. 

Moreover, 2020 was also the year when MicroStrategy (now Strategy) began purchasing BTC, later becoming over the years the traditional financial asset on the stock exchange most closely representing an indirect investment in Bitcoin, before the arrival of ETFs.

In light of all this, it is clear why the price of Bakkt shares on the stock market has plummeted, even though the company is backed by the owner of the New York Stock Exchange (ICE). 

The crash in the Stock Market of Bakkt shares: is there a correlation with the price of BTC?

The initial price of BKKT shares in 2020 was $275.

Thanks to the great bull run of the following year, it managed to reach a peak at $1,270, but only to then rapidly crash even below $100 already by January 2022. 

In the midst of a bear-market, the price obviously continued to fall, dropping in December of the same year to below $30. 

Therefore, the collapse of Bakkt’s shares on the Stock Exchange began already with the bear-market of 2022, during which it not only lost all the gains accumulated in 2021 thanks to the great bull run, but also a good part of the value it had at its debut. 

If during the course of 2023 it managed to return to almost $70, 2024 was another great bloodbath, most likely precisely due to the competition from the stock market debut of ETFs in January. 

And so in February of last year, its price fell even below $15, eventually reaching the lowest peak in May at $5.5. At that point, it had lost 98% of its value in four years. 

The recent movements

However, the company continues to be listed on the stock exchange. 

For example, in November, after the electoral victory of Trump, it had a surge, with a very rapid rise beyond $37. In other words, from the lowest point in May, it had marked a remarkable +500%. 

Even that for. turned out to be a flash in the pan, although for now its price has never dropped and remained below $7. 

Practically after the boom at the beginning of November, it had settled in an area between $22 and $33, within which it had moved sideways until the end of January. 

Then, however, there was a new collapse, which had brought the oscillation band down to a zone between $10 and $17. 

The recent problems

A new crash occurred on Monday, when it again touched $5.5 for a very brief moment. 

The new oscillation band for now seems to be between 7$ and 10$.

The collapse on Monday was triggered by the news that Bank of America and Webull will not extend their commercial agreements with the company.

These are two important clients of Bakkt, and while the commercial agreement with Webull will continue until June 14, the one with Bank of America will end as early as April 22.

Note that Bank of America accounted for 17% of the company’s revenues from loyalty services, while Webull contributed 74% to Bakkt’s crypto services revenues.

At this point, one wonders whether the company’s business model should still be considered solid, or if it needs to be revised in light of the innovations introduced in the crypto markets in recent years. 

The future problems

One thing that is greatly concerning the shareholders is that the company has already postponed its earnings conference call twice.

Furthermore, it could also risk a class action due to market turbulence regarding the trend of its stock price, which has attracted the attention of some law firms for suspected violations of federal securities laws.

Rumors have been circulating for some time that ICE wants to sell or restructure Bakkt into smaller entities, and at this point, it seems inevitable that they will do something. 

It must be said that Bakkt now capitalizes at just over 125 million dollars, while for example the parent company ICE exceeds 99 billion, but for the company owning the NTSE it would be a blow to have to admit having made a mistake in strategy with Bakkt.