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Why Bakkt Stock Saw Wild Volatility on Tuesday

By Daniel Sparks – Oct 26, 2021 at 6:43PM

Key Points

  • Monday's news of partnerships with Mastercard and Fiserve sent Bakkt shares on a roller-coaster ride on Tuesday.
  • Trading in the stock was paused at one point due to high volatility.

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Cryptocurrency-related hype brought in the traders.

What happened

Shares of Bakkt Holdings (BKKT -4.49%) traded with extreme volatility on Tuesday. The stock initially soared 22.9% and then sank by as much as 28.8%. It finished the session down by 22.3% -- though still far above where it ended last week's trading.

The crypto derivatives provider attracted a lot of attention from traders following news Monday morning that it had partnered with Mastercard (MA -0.28%) to help merchants, banks, and financial technology companies in the U.S. to offer cryptocurrency solutions and services. 

A chart showing a chalkboard sketch of a stock price moving lower.

Image source: Getty Images.

So what

The services that Mastercard partners will be able to access thanks to this Bakkt integration "include the ability for consumers to buy, sell and hold digital assets through custodial wallets powered by the Bakkt platform and streamlined issuance of branded crypto debit and credit cards." Mastercard also said it will integrate cryptocurrencies into its loyalty program offerings.

Bakkt also announced Monday afternoon that a new partnership with payments and financial technology company Fiserve (FISV -0.93%) will provide expanded abilities to move funds into and out of mobile wallets, making cryptocurrencies more practical to use.

Now what

Bakkt's wild swings on Tuesday suggest that investors are having trouble deciding whether or not these deals and the associated hype are already fully baked into the tech stock's valuation. In addition, much of the volatility may simply reflect day trader action. The oscillations were so extreme that trading of the stock was temporarily halted at one point during the session.

The wild ride probably isn't over: Bakkt shareholders should be prepared for more volatility in the coming trading days.

Daniel Sparks has no position in any of the stocks mentioned. His clients may own shares of the companies mentioned. The Motley Fool owns shares of and recommends Mastercard. The Motley Fool has a disclosure policy.

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