Bakkt has announced that it will offer bitcoin future contracts for dollars. With this they want to compete with CME Group.
“We also intend to offer a cash-settled contract,” said Bakkt chief operating officer Adam White during the Invest: NYC conference.
Launch of Bakkt
For a long time the launch of Bakkt was looked forward to because it seemed to be the party, in contrast to CME, which could bring the bitcoin price to new heights. Customers who want to speculate on the price by opening a short or long have to do so by entering bitcoins, not dollars.
But that is just one of the three reasons why crypto enthusiasts were looking forward to the launch of Bakkt. The second has to do with the reliability of Bakkt. The company is in fact a subsidiary of Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange. In addition, Bakkt also announced large and important partnerships with Microsoft and Starbucks.
Bakkt and Starbucks are working on an app that allows you to buy coffee with bitcoin.
Buy the rumor, sell the news
Bakkt was launched on September 23 and the bitcoin course collapsed promptly. This was the worst day of bitcoin in the whole of 2019. On the first day, contracts worth only 71 bitcoin were traded.
We wrote at the time that this was the beginning and that it was too early to call Bakkt a failure. De Bakkt Volume Bot shows that Bakkt has found its way up. Tuesday for 1622 bitcoins were traded and Wednesday for 1456.
ICYMI: Tuesday’s Bits Bitcoin Monthly Futures:
? Traded contracts: 1456 ($ 12,725,440)
Before Day before: 1622 (-10%)
? All time high: 1756 (11/8/2019)* bleep blop * tip sats for server costs https://t.co/TF6sNUwWpO ? pic.twitter.com/bk5aBVLPLc
– Bakkt Volume Bot (@BakktBot) November 13, 2019
CME ahead of Bakkt
But are you able to compete with CME? Briefly about CME: they also offer sjort and long contracts for bitcoin. You buy this with dollars instead of with bitcoin.
During the disappointing launch of Bakkt, it was soon concluded that institutional investors were only interested in trading contacts and that they had little interest in owning bitcoin. The weeks after the launch that was also confirmed. The trading volume on CME shot up while Bakkt kept on picking up.
Until the change began.
Bakkt runs into CME
The recent volatility in the price of bitcoin and the performance of the two futures markets show that sentiment is changing. The CME contracts have fallen in recent months compared to their performance over the full year.
The annual average is 7,237 contracts per day. From October 22 (except for three days), the trading volume is much less: around 3000 to 5000 below the annual average. Bakkt saw a rise in the same period from 22 October. Just look at that one shared tweet higher in this article and compare that with the statistics below.
What conclusion can you draw?
But we should not become too enthusiastic about Bakkt either. The growth is nice to see, but the volume is not yet super high.
Investors are not yet 100% convinced of bitcoin only contracts. And Bakkt seems to see that too. From December 9 their option contracts are available in dollars.
These contracts are offered through ICE Clear Singapore. But the product is said to be globally accessible. Bakkt is in talks with the Monetary Authority of Singapore, the country’s central bank and the financial regulatory authority, to offer the planned product.
If everything goes well, their new product will go live on 9 December. Coindesk writes that CME has announced that it wants to offer a competitive product on 13 January.
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