Trump's Potential Bakkt Acquisition: A New Dawn for Crypto?

Trump's Potential Bakkt Acquisition: A New Dawn for Crypto?As president-elect, Donald Trump's actions in the crypto space are drawing significant attention even as he prepares for the White House. On November 19th, news emerged that Trump Media & Technology Group (TMTG), his social media company, is in talks with Intercontinental Exchange (ICE) to acquire the cryptocurrency exchange Bakkt

Trump's Potential Bakkt Acquisition: A New Dawn for Crypto?

As president-elect, Donald Trump's actions in the crypto space are drawing significant attention even as he prepares for the White House. On November 19th, news emerged that Trump Media & Technology Group (TMTG), his social media company, is in talks with Intercontinental Exchange (ICE) to acquire the cryptocurrency exchange Bakkt. This announcement sent shockwaves through the market, resulting in a surge in both TMTG and Bakkt's stock prices. By the close of November 19th, TMTG's stock price had risen by over 16%, while Bakkt's soared over 163% after multiple circuit breakers were triggered. Bitcoin's price also reacted positively, briefly exceeding $94,000 on November 20th, a surge of over 30%.

This potential acquisition is seen as another significant strategic move by Trump in the crypto landscape, injecting much-needed confidence into the market. Analysts generally believe that a successful TMTG acquisition would bring substantial brand recognition to Bakkt, alleviate its long-standing financial woes, and unlock new growth opportunities. Furthermore, it would send a wave of positive signals to the crypto market.

Bakkt: From Ambitious Beginnings to Financial Straits

Launched by ICE in 2018, Bakkt initially aimed to enable Starbucks customers to buy coffee using Bitcoin. However, its journey has been far from smooth. After its IPO in October 2021, Bakkt's stock price briefly reached approximately $40 per share before steadily declining. The company has consistently struggled with profitability.

Its 2023 financial report showed strong revenue growth to $780 million, but a net loss of $226 million. The first three quarters of 2024 showed cumulative revenue of $1.693 billion, a year-on-year increase of 199.30%, yet still resulted in a cumulative net loss of $63.078 million. In February of this year, Bakkt admitted in a filing with the Securities and Exchange Commission (SEC) that it was facing a liquidity crisis, even stating that it "may not be able to continue as a going concern." Subsequently, Bakkt received SEC approval to raise $150 million through a stock sale to alleviate its financial pressures.

Since its IPO in October 2021, Bakkt's stock price has continuously fallen, dropping below $1 in mid-March of this year, triggering a delisting warning from the New York Stock Exchange. In June, Bakkt reportedly considered a sale or spin-off, engaging financial advisors to evaluate strategic options.

Zhu Youping, rotating chairman of the Blockchain Special Committee of the China Communications Industry Association, commented on Bakkt's predicament, suggesting that a TMTG acquisition would leverage Trump's brand influence to build trust and expand Bakkt's user base. Furthermore, TMTG's involvement could accelerate Bakkt's technological innovation, leading to new products and services, such as integration with social media platforms and more convenient payment solutions. TMTG's financial backing would also alleviate Bakkt's funding constraints.

Trump's Crypto Strategy: Continuously Delivering Positive Signals

During his campaign, Trump repeatedly expressed a positive outlook on the crypto market, even suggesting that he would "make Bitcoin a strategic reserve asset for the United States if re-elected" and "fire SEC Chairman Gary Gensler on day one" due to his strict regulatory stance. In September, the Trump family-backed decentralized finance project World Liberty Financial (WLF) launched, aiming to create a cryptocurrency banking platform to encourage public participation in crypto lending and investment.

The potential Bakkt acquisition represents another significant move in Trump's crypto strategy, further cementing his pro-crypto stance. Zhu Youping believes that, given Trump's electoral victory, he will likely create a more relaxed policy and regulatory environment for cryptocurrencies upon assuming office.

Following his election victory, Trump has nominated several "crypto-friendly" individuals for key government positions. For example, Pete Hegseth, nominated for Secretary of Defense, publicly supports Bitcoin's decentralized value and has pledged not to sell his Bitcoin. Additionally, Trump appointed Howard Lutnick as Secretary of Commerce; Lutnick, chairman and CEO of Cantor Fitzgerald, which has been Tether's custodian since late 2021, is also considered a crypto supporter. Furthermore, Trump announced that Elon Musk will lead the proposed "Department of Government Efficiency," and Musk, an active participant in the crypto market, whose statements often impact cryptocurrency prices, is involved. There are reports that this department is exploring a blockchain-based election platform.

Marion Laboure, a research analyst at Deutsche Bank, notes that under Trump's leadership, cryptocurrencies would benefit from a more favorable regulatory and political landscape, although future policy uncertainty remains. She suggests that a Trump administration might accelerate regulatory transparency, increase institutional participation, improve market infrastructure, and promote wider mainstream adoption of cryptocurrencies. However, policy uncertainty remains a key factor influencing price volatility.

Zhao Wei, a senior researcher at OKX Research Institute, believes that the US, as a major global economy, significantly impacts the crypto market through its economic and crypto policies. In the future, under the new economic environment, the crypto market will continue to diversify and mature, with technological innovation and regulatory policies shaping the future market landscape.

Trump's proposed acquisition of Bakkt has profound implications not only for Bakkt itself but also for the entire crypto market. The surge in Bitcoin's price reflects market expectations regarding Trump's future crypto policies. However, the future policy direction remains uncertain, continuing to be a significant factor influencing crypto market development. The market will closely monitor the Trump administration's specific policy implementations and whether this acquisition ultimately succeeds.