Bakkt announced early today the launch of live trading to the anticipated Bitcoin Futures contracts. The launch opens opportunities for institutional investors to assume positions in the crypto on a regulated platform. The Futures Contracts come with a safe storage solution they call Bakkt Warehouse and daily as well as monthly settlement periods.
Bitcoin drops below $10,000 on the launch of Bakkt futures contracts
The entry of Bakkt into the Bitcoin market has not lived to the anticipated hype. It experienced a slow start, and per official data, the platform has so far traded around 29 Bitcoin futures contracts. The total traded value currently stands at $290,000. The first trade took place at noon UTC minutes after the launch with the first Bakkt futures changing hands at $10,115. Bitcoin later dropped to below $10,000.
Bitcoin investors are not impressed with the start, but crypto experts are optimistic that soon we can experience greater instructional inflow. They indicated that the performance of the Bakkt futures contracts should not rely on only the first day. It takes some time for companies to set up accounts and formulate trading strategies, as well as to grow volume.
The slow start is a common characteristic for regulated futures contracts experience natural progression. Su Zhu, the CIO, and CEO of Three Arrows Capital, indicated that most futures contracts experience soft adoption on the day of launch because some futures brokers are not willing to clear their contracts on the first day.
Bakkt futures contract register a volume of $280,000
Last week cryptocurrency market analyst Alex Kruger compared the launch of Bakkt Bitcoin Futures Contracts with the launch of the Chicago Mercantile Exchange Futures. He conducted a twitter poll asking whether Bakkt will replicate CME. When CME launched it registered a volume of $460 million in its first week. So far Bakkt futures have registered a volume of around $290,000.
The nature of the futures contracts is very different. CME’s Bitcoin Futures, for instance, are cash-settled whereas Bakkt futures provide physical delivery. It’s for this matter that we have witnessed a slow start because physical contracts experience slow scale-up relative to cash-settled contracts. Also, Bitcoin trading volumes when CME launched in December 2017 were higher than they are today.
Currently, Bitcoin trading volumes are approximately $367 million, which might be the reason for the low volatility witnessed according to Messari. Blockchain.com, on the other hand, indicates that the trading volume is $1.36 billion.
The launch has not boosted the Bitcoin market as BTC price slipped below $10,000. Observers think that Bakkt futures could be a game-changer and lead to higher institutional volume. However, the impact of Bakkt futures on the crypto markets is still speculative.