According to the latest reports, Bakkt is all set to begin the beta testing of its Bitcoin futures on 22nd July on the exchange of ICE, i.e., Intercontinental Exchange. This endeavor has been delayed for long and the entity is yet to announce the final date of launch. In addition to that, reports were doing the rounds last week that indicated the firm might also be building Bakkt Pay, a related wallet for digital assets.
But the question here is that if the digital currency market is ready for the Bakkt’s Bitcoin futures contracts; especially post the discontinuation of BTC futures trading vehicles by the CBOE (Chicago Board Options Exchange) Global Markets in March.
The answer may well be a ‘yes’ since the number one cryptocurrency has seen a rise of over 200% since January. While writing, Bitcoin was being traded at $11,268.69. Experts do suggest that there may be multiple factors contributing to this price surge experienced by Bitcoin including, the slow global economy, geopolitical headwinds, and even the announcement of Facebook’s own digital currency titled Libra.
Growing Interest in Bitcoin Futures:
There is no doubt that the digital currency market is dynamic. However, ever since the CBOE and CME (Chicago Mercantile Exchange) have ventured into the trading instrument of Bitcoin futures in the latter part of 2017, demographics have changed. Also, the fact that Bitcoin futures let investors speculate the prices of BTC without having actually to own the crypto might be working in its favor.
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CME also released data to show the increased interest of institutional investors in the BTC futures. They tweeted a graph on 18th June 2019 to support their statement:
CME Bitcoin futures (BTC) shows growing signs of institutional interest. BTC open interest rose by a record 643 contracts in a single day, establishing a new all-time high of 5,311 contracts on June 17 (26,555 equivalent bitcoin; ~$250M notional). https://t.co/I6A3jD6Iq3 pic.twitter.com/ljz6EbvK79
— CME Group (@CMEGroup) June 18, 2019
OpenLTV’s CEO Kirill Bensonoff believes the market has become mature now as it is driven by strategic and long-term investing. Even he pointed out the growing presence of institutional investors while saying that BTC is maturing as the digital gold. Bensonoff believes that the ongoing momentum might be possibly driven by Bakkt, Fidelity, and others loading up the inventory before their future market launches.
Will the Prices Rise?
The crypto enthusiasts are already aware that when CME, as well as CBOE, had introduced their futures contracts, Bitcoin had reached its all-time peak of about 20,000 USD. This was also when the ICOs were soaring. So it was expected that these developments would lead to growing demands and interest in the digital assets for both the institutional as well as retail investors.
However, the market acted contrary to the expectations and the period what we call a ‘crypto winter’ began. It took roughly over a year for the prices to be back on track again. Hence, Bakkt launching beta testing of its futures can escalate the prices or not is a question that would only be answered by time.
There are a few things to be noted, though. Bakkt must yet secure regulatory approval for its custody warehouse, the place where it plans to store the digital assets. That’s because Bakkt’s futures contracts are to be settled physically. Meaning, upon the expiry of the contracts, BTC would be dispatched to its warehouse. CBOE and CME, on the other hand, had the fiat-settled futures contracts.
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As per the reports, Bakkt’s derivative will be different as they have closely worked with the CFTC (Commodity Futures Trading Commission) of the US while the development of this instrument was going on, says the CEO. Moreover, they have targeted the product at the institutional, retail, and merchant investors. They will also involve a sample group in the July end beta testing. Contracts will be offered to settle on a monthly and daily basis, per the reports.
