Will it be postponement or are we going to see fireworks today? People have been waiting for years for more institutional money in the cryptomarket and today the ban could just be broken. Bakkt announced earlier this year that it wanted to test from today.
Huh Bakkt? What is that again?
The Bakkt platform will trade bitcoin futures for institutional investors. Normally with bitcoin futures you do not trade with real bitcoins, but you speculate purely on the course. At Bakkt this is different. Every bitcoin in a bitcoin future contract is actually stored in the Bakkt Digital Asset Warehouse. That’s where the name comes from: every bitcoin is physically “backed up”.
Traditional investment firms that want to get a taste of the crypto geek have different requirements (but especially, different regulations) than you and me. One of those requirements is safe storage and an assurance that the investment cannot be lost. And that is precisely why Bakkt Digital Asset Warehouse is built and Bakkt is so eagerly awaited. Bakkt also offers insurance against theft.
Trust in experience
In recent years, many exchanges and crypto platforms have become wet on theft through hacks. Customers could often whistle for their bitcoin or their money. The difference between these exchanges and Bakkt is that the owner of Bakkt, ICE, is not a small, new player. ICE stands for Intercontinental Exchange, also the parent company behind the New York Stock Exchange, the stock market of Wall Street. This inspires a lot of confidence.
The launch of Bakkt has been postponed a few times because the correct permits have not yet been arranged.
Last week was also the Bakkt Digital Asset Summit. A summary of this can be found in the tweet below. Some interesting points:
- A large group of institutional customers seems to be ready to invest immediately on day one of the launch of Bakkt.
- The Bakkt sales team focuses on brokers, market makers, prop trading desks and liquidity providers.
- In addition to the futures on bitcoin, there can also be speculation on the value of ether.
We think #Baked 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
At the meeting, Dawn Stump of the Commodities Futures Trading Commission (CFTC) said that cryptocurrency cannot threaten financial stability. He also said that there is a growing demand and interest for bitcoin futures.
Futures on bitcoin
Futures are contracts to buy bitcoin at an agreed price at a later date. There are already platforms that offer futures on bitcoin, but Bakkt takes a different approach. Bakkt actually buys the bitcoin and stores it in their Warehouse. Crypto investors are therefore eagerly looking forward to this opportunity because it is expected that this can ensure a run on bitcoin.
There are also signs that the run is coming. On 13 May, Bakkt tweeted that they will start testing Bakkt today (22 July). The value of bitcoin just before the tweet was slightly less than 6,600 euros. Within half an hour the rate rose to 7,200 euros, an increase of almost ten percent!