While retail investors were fleeing the cryptocurrency market in droves during the first week of August 2018, some of the largest names in traditional finance were quietly laying the groundwork for institutional crypto trading. The Intercontinental Exchange (ICE), parent of the New York Stock Exchange, unveiled Bakkt on August 3 — a comprehensive digital asset platform that promised to bring Wall Street-grade infrastructure to Bitcoin and cryptocurrencies. Just two days later, JCE Capital Management launched a $100 million crypto-focused hedge fund, underscoring the growing divide between retail panic and institutional conviction.
TL;DR
- ICE, parent of NYSE, announced Bakkt on August 3, 2018 — a regulated digital asset platform
- Bakkt planned to offer physically-delivered Bitcoin futures starting November 2018
- Microsoft and Starbucks partnered with Bakkt as launch partners
- JCE Capital Management launched a $100 million crypto hedge fund on August 5
- SEC had received over 1,300 comments on the VanEck SolidX Bitcoin ETF proposal
- Crypto market cap at ~$230 billion, down from $800 billion peak in January 2018
- BTC traded at $7,068, ETH at $410 — both down sharply from yearly highs
Bakkt: Wall Street’s Answer to Crypto Trading
The announcement of Bakkt sent shockwaves through both the crypto and traditional finance worlds. ICE, which operates 23 leading global exchanges including the NYSE, said the new platform would create an open, regulated, and global ecosystem for digital assets. The centerpiece of the initial offering was a regulated, physically-delivered Bitcoin futures contract — a significant departure from the cash-settled Bitcoin futures that CME Group had launched in December 2017.
Physical delivery meant that traders who held contracts to expiration would receive actual Bitcoin rather than a cash equivalent, creating direct demand for the underlying asset. The platform also planned to include a regulated warehouse for secure custody of digital assets, addressing one of the major concerns that had kept institutional investors on the sidelines.
Microsoft and Starbucks Join the Fold
Bakkt was not just an exchange initiative — it was an ecosystem play. Microsoft joined as a technology partner, contributing its cloud computing expertise through Azure to help build the platform’s infrastructure. Starbucks came on board as a consumer-facing partner, with plans to develop applications that would allow customers to use cryptocurrencies for everyday purchases at its thousands of locations worldwide.
The involvement of these household names lent significant credibility to the crypto space at a time when it desperately needed it. Bitcoin had fallen from nearly $20,000 in December 2017 to around $7,068 by August 5, 2018, and the broader market was engulfed in what would become one of the longest bear markets in crypto history.
JCE Capital Enters the Fray With $100 Million Fund
On August 5, Denver-based JCE Capital Management officially launched a $100 million crypto-focused hedge fund. The fund was designed to employ systematic and quantitative trading strategies across Bitcoin, Ethereum, and other major cryptocurrencies. The launch was notable for its timing — coming during one of the worst stretches of the 2018 bear market — and for its size, which suggested that at least some institutional allocators were willing to commit significant capital to digital assets despite the prevailing pessimism.
The JCE Capital launch reflected a broader trend of institutional infrastructure being built during the bear market. While retail investors were capitulating and crypto-focused startups were laying off staff, hedge funds, trading firms, and exchange operators were investing heavily in the technology and compliance frameworks needed to serve the next wave of crypto adoption.
SEC ETF Decision Looms Over Market
The institutional narrative was further complicated by the ongoing regulatory uncertainty surrounding Bitcoin ETFs. The SEC had received more than 1,300 public comments on the VanEck SolidX Bitcoin Trust proposal, which sought to list the first physically-backed Bitcoin ETF on a major US exchange. The regulator had recently rejected a proposal from the Winklevoss twins for a Bitcoin ETF, though one SEC commissioner had dissented from that decision — a rare public split that some interpreted as a potentially positive signal for future ETF approvals.
However, the SEC would soon extend its decision deadline on the VanEck SolidX proposal to September 30, and then ultimately reject multiple Bitcoin ETF applications later in August, sending the market sharply lower. For the moment, on August 5, the market was still digesting the Bakkt news and weighing the possibility of an ETF approval against the relentless downward pressure of the bear market.
The State of the Market
As of August 5, 2018, Bitcoin was trading at $7,068.48 with a market capitalization of $121.5 billion. Ethereum sat at $410.52 with a $41.5 billion market cap. The total cryptocurrency market capitalization was approximately $230 billion — a staggering 71% decline from the $800 billion peak reached in early January 2018. The market was on track for a record seventh consecutive week of losses, a streak that underscored the severity of the post-bubble correction.
Why This Matters
The first week of August 2018 was a watershed moment for the institutionalization of cryptocurrency. The Bakkt announcement and the JCE Capital fund launch represented two sides of the same coin: the building of the infrastructure that would eventually enable trillions of dollars in institutional capital to flow into digital assets. While the retail-driven bull market of 2017 had been built on speculation and hype, the institutional phase would be built on regulated exchanges, qualified custody, and professional trading firms.
The irony was that this infrastructure was being assembled during the darkest days of the bear market, when public sentiment toward crypto was at its lowest ebb since the Mt. Gox collapse. The institutions building in August 2018 were not chasing a rally — they were positioning for the long term. Their timing, in retrospect, would prove prescient, as the infrastructure built during this period would help facilitate the dramatic recovery and eventual bull runs of 2019, 2020, and beyond.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Cryptocurrency markets are highly volatile. Always conduct your own research before making investment decisions.