Bakkt Futures Trading Volumes Continue to Grow—But There’s a Catch
Bakkt futures trading volume hit a record high of 4,269 BTC in a single day; however, very little Bitcoin has actually been physically settled on the exchange.
The launch of the futures trading exchange from the Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange, was one of the most highly anticipated events on the 2019 crypto calendar. However, Bakkt got off to a sluggish start and traded only 623 futures contracts in the first week of launch in late September. Volume has started to pick up pace in recent weeks, hitting ~$37.45 million on Wednesday, passing its previous high of ~$19.96 million on November 22.
The interesting thing about Bakkt’s platform is that its futures are physically settled, meaning all trades are settled in Bitcoin rather than the cash equivalent. The catch is that very little Bitcoin has actually been settled by the exchange. According to trader Alex Krüger, in the months of October and November, Bakkt has delivered just 32 BTC, worth $242,000 at today’s prices, for its monthly futures.
Bakkt’s physically settled futures contracts are considered a revolutionary concept for the future of Bitcoin as it means institutional investors will end up holding Bitcoin in their portfolios rather than the cash equivalent, meaning real crypto adoption on Wall Street. “The more regulated volume, the better. Bakkt’s growth is very positive. Yet keep present Bakkt is not that different from the CME. It is almost entirely paper trading,” said Kruger.
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Bakkt will launch cash-settled futures on December 9 in an effort to get closer to its biggest rival, the Chicago Mercantile Exchange (CME). The CME has offered Bitcoin futures for nearly two years, and in Q3 of this year, it averaged 5,534 contracts per day, equal to 27,670 Bitcoin, worth $289 million at the time. However, CME settles its contracts with fiat currency, a direction in which Bakkt appears to be heading.
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