Bakkt’s Futures Launch Kicks off with a Dip in Bitcoin Market

Bakkt’s highly anticipated Bitcoin? futures launch has kicked off at the beginning of this week, however, its effect on the market has been less than positive. These Contracts, the first of their kind to be physically settled in Bitcoin?, have seen Bitcoin? drop below an important price floor of $10,000.

The futures offering by Bakkt, which is a subsidiary of the Intercontinental Exchange? (ICE), a well known institutional trading platform, is designed to be a doorway for these traditional investors to find their way to Bitcoin? in a manner that introduces them to the world of cryptocurrency? investing. 

Futures contracts for institutional investors has shown much promise over the few years they have been going since CME and CBOE launched them in 2017. However, the Bakkt offering is slightly different in that it uses actual Bitcoin? tokens in the contracts, rather than just following the market with fiat currency.

Futures contracts from CME have certainly been on the rise; they have even applied for a doubling of their contracts limits for their clients, and only last week, CME also announced that they would be introducing futures trading option in the coming months to launch in Q1 of 2020.

Bakkt have been trying to get their launch of this offering off the ground for over a year, and when it finally came, it was with the blessing of all the regulators prevalent in such a traditional investor offering. This is another reason why Bakkt’s futures platform is being heralded as a game changer. 

In fact, Tom Lee of Fundtrat has said that this offering from Bakkt could be the thing that get institutional interest off the ground and helps the Bitocin market succeed when it comes to the institutional adoption it so craves. 

A decent start

Other than seeing the market fall below the $10,000 mark at the time of its launch, the opening trades from the Bakkt offering have seen 19 BTC being traded within the first 24 hours. This is a decent figure, but nothing extraordinary. To put it into context, the Limited ETF that was put out by VanEck recently saw a bit of a limp start with only 4 BTC being traded in the opening week.

Many crypto commentators have commented on the apparently slight volume? levels, with one trader comparing the platform’s launch so far to patterns typically seen with earlier products:

“CME bitcoin? futures traded $460 million on its first week. Current volume? is around $700 million. The Van Eck fake ETF traded $0 on its first week.” 

Cryptocurrency? investor Ari Paul argued that physical delivery is likely to slow adoption, at least initially, contending that:

“Probably a more gradual scale-up since it’s physical. With CME futures, anyone with the right FCM [Futures Commission Merchant] could immediately trade on launch [...] I’d think the incremental demand (beyond CME) would come from people who want to buy or sell physical for delivery, at least at first. Receiving could be instant (use FCM to convert), but I’m kind of thinking depositing physical will be gradual.”