Bakkt Review Using Elliott Wave Analysis

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Bakkt Review

It would not come as a surprise if some of us have never heard of this digital assets company called Bakkt Holdings Inc. (BKKT) although it was founded sometime back in 2018.

Bakkt Holdings Inc. (NYSE:BKKT) subsequently went public on 18th October 2021 via the SPAC route by merging with blank check company VPC Impact Acquisition Holdings.

In a nutshell, BKKT is a digital asset marketplace that enables consumers, businesses, and institutions to buy, sell, spend, send and redeem digital assets.

Its core business is similar to more well known brand names like Square, Coinbase, Paypal etc.



Business Model

Essentially, Bakkt operates in 5 main business segments:

  • Cash (Fiat Currency)
  • Cryptocurrency
  • Loyalty System
  • NFT Assets
  • Gift Cards

Bakkt generates its revenue by taking a 2% commision on each payment on its platform as a transaction fee.

And also earns a 2% spread on each cryptocurrency purchase.

As well as its conversion back to a fiat currency.

By the end of 2021, Bakkt expects to generate around $889 million in revenue serving its customer base of 9 million active users.

Currently, Bakkt is still expected to remain unprofitable on an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) basis with a loss of $169 million.


Ambitious Projections

Armed with the strong belief that cryptocurrencies are the way to go in the future.

Bakkt’s management has some pretty ambitious targets you might say.

It aims to grow its revenues at a compounded annual growth rate (CAGR) of 75% between 2021 and 2025 (after excluding transaction-based expenses).

And by 2025, Bakkt is projected to generate $6.6 billion in revenue, mostly fueled from its cryptocurrency trades.

It believes it can achieve these ambitious growth targets by aggressively expanding overseas.

As well as securing more major payment partners.


Favourable Outlook

Our Bakkt review shows that they might just have hit the jackpot with its latest partnership deals.

The first piece of good news is that Bakkt Holding Inc. has striked a partnership with Mastercard to enable its customers to buy, sell and hold cryptocurrencies.

As well as issue crypto-linked debit and credit cards.

And mind you, Mastercard is a global powerhouse in the international payment arena with more than 1.1 billion cards users in circulation worldwide.



The second high profile partnership deal is that with Fiserv.

Fiserv provides financial technology and financial services to more than 100 million digital banking users.

Their clientele include banks, credit unions, securities broker dealers, leasing and finance companies, and retailers etc.

Bakkt has partnered with Fiserv to expand its omnichannel Carat network with cryptocurrency transfer options.

These two major partnerships indicate that Bakkt’s ambitious 2025 estimates could actually be achievable.

Especially if it could convince more financial companies to hop on board the digital payment bandwagon.



Bakkt Elliott Wave Analysis

Our Bkkt review showed that the end October rally which saw the stock more than triple in value can be labeled as an Wave 1 in White according to the Elliott Wave Analysis.

The underlying price action for the Wave 1 in White could be interpreted as a motive 5-3-5 (A)-(B)-(C) in Blue in the lower degree.

Reaching a high of $49.10 on the 1st November 2021.

With this pretext in place, we are inclined towards a 3-3-3-3-3 Leading Diagonal in the larger time frame.

Keeping in mind that there might be a possibility of either one of the motive sequence being a 5 wave impulsive move.

With a high possibility skewed towards the 3rd wave in my view.


Corrective Structure

From a fundamental perspective, the recent fall in the share price of Bkkt is puzzling.

Some analyst are citing that with Bkkt’s warrants trading below their intrinsic value, it is inevitable that its stock price will collapse.

Looking at the charts, this drop can be viewed as an corrective 5-3-5 (A)-(B)-(C) in Blue for a Wave 2 in White.

The drop is considered gradual as compared to its prior steep rally.

The middle (B) leg in Blue was pretty shallow and remotely resembles a regular or expanded flat correction in the lower degree.

Apparently, not very convincing for a stronger push higher.

And Bkkt’s share price did ended up dropping further after that small retracement.

Eventually dropping to around the Fibonacci 78.6% zone at $17.33 where it becomes the major support zone.


Potential Reversal

Currently, there is a possibility for a Gartley Harmonic pattern although the small “B” retracement did not technically fulfill the Fibonacci 38.2% retracement criteria for a Gartley.

From a trend line perspective, Bakkt has technically broken above the adjusted down-trend line.

It may not have the correct “Look” but it does somehow it does have the correct “Feel” to it.

The current price action in the lower time frame seems to be indicating the completion of a 5 wave sequence for a Wave [1] in Green if it breaks above the Green Dotted Box for a higher high confirmation.


Long Term Play

Personally, I am looking for a reasonable pullback once Wave [1] in Green in the lower degree has confirmed.

My ideal entry would naturally be around the 50% to 61.8% Fibonacci retracement of the Wave [2] in Green as shown by the Green Arrow.

From a Risk to Reward perspective, the potential downside risk is small compared to the huge upside potential.

However, as we all know, nothing is set in stone especially in trading.

It is all about “Probability”, period.


Summary

As a long term crypto bull, I am more inclined towards further upside potential for Bakkt Holdings Inc. based on the long term prospects of the cryptocurrency sector.

As well as favourable fundamentals based on the Elliott Wave Principle.

Kindly note that this is not financial advice, just my humble opinion.

Share Your Views

How many of my fellow traders agree with me on my Bakkt Review ?

Do comment and share your thoughts in the comments box.


Trade Safe and Prosper.


For more potential trade setup suggestions on the US Stock Markets, check our Blog Posts On US Stocks.


Shorten your learning curve by downloading our complimentary “Elliott Wave Cheat Sheets”.


For more articles on the Elliott Wave Principle, check out our other posts in our Elliott Wave Blog.


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