Bakkt’s long-delayed bitcoin futures platform is scheduled to begin testing today.
The trading platform, aimed squarely at institutions, is widely expected to be a game-changer and a major catalyst for the bitcoin price. As Fundstrat concluded last week, investors are eagerly waiting on the sidelines:
“There appears to be a critical mass of adopters ready to come on board on Day 1 of the Bakkt launch… The launch could be a huge accelerator for market growth.”
Bakkt’s Bitcoin Moonshot
Bank-rolled by the Intercontinental Exchange (ICE) - the parent company of the New York Stock Exchange - as well as Starbucks and Microsoft, Bakkt is the most anticipated launch of 2019.
Per a Medium post written by COO Adam White in June, the platform will begin user acceptance testing today.
“On July 22, two days after Apollo 11’s 50th anniversary, Bakkt will initiate user acceptance testing for its bitcoin futures listed and traded at ICE Futures U.S. and cleared at ICE Clear US.”
— Adam White (@WhiteAdamL) June 13, 2019
While bitcoin futures trading isn’t new, Bakkt is whole different beast. The futures contracts are physically settled in bitcoin. Investors receives a real allocation of BTC at the end of the contract period. In contrast, CME bitcoin futures simply track the spot price and settle in cash. It never “touches” bitcoin.
Bakkt will also provide fully-regulated, institutional-grade custody for digital assets. The firm applied for a trust license, allowing it to act as a qualified custodian with $100 million insurance coverage. The trading platform will also serve as a price discovery market that doesn’t rely on “manipulated” exchange-driven spot prices.
In simple terms, it’s the first physical bitcoin product that institutional players are comfortable using.
Bakkt: “huge accelerator” for bitcoin price?
Market research firm Fundstrat said last week that Bakkt will be a “huge accelerator” for bitcoin growth. More than 150 institutional investors and service providers attended Bakkt’s Institutional Digital Asset Summit last week, and the sentiment was positive.
The Commodities and Futures Trading Commission (CFTC) confirmed that institutional demand for bitcoin is growing. As the Fundstrat report writes:
“The CTFC is seeing growing demand and interest for Bitcoin futures from the public.”
We think #Bakkt could be a huge catalyst for institutional participation in the #crypto market. Here are our takeaways from the Bakkt institutional summit yesterday at the NYSE... #bitcoin #BTC #ETH @fundstrat @fundstrat_ken pic.twitter.com/lkRylD1P4C
— Sam Doctor (@fundstratQuant) July 19, 2019
Is a bitcoin ETF next?
Many have speculated that Bakkt’s launch will have a domino effect for other institutional bitcoin products.
Bakkt solves many of the regulators’ concerns about cryptocurrencies. It provides a reliable price discovery for bitcoin, immune from the exchange spot price which regulators worry is subject to manipulation. Bakkt also provides high-grade custody and a liquid futures market.
These features may help the SEC get more comfortable with the idea of a bitcoin ETF.
The final Bakkt launch date is not yet known. It has already been pushed back from January 2019. CCN reached out to Bakkt to confirm today’s test launch and will update this article when we hear back.