The day many thought would never come has come. The cryptocurrency futures trading platform Bakkt, offered by the Intercontinental Exchange (ICE), is now live and all eyes will be watching to see if it turns out to be the game-changer that is expected. In its initial operations, it doesn’t yet appear to be blazing a trail of investments.
It’s been about a year that ICE has been working to put together Bakkt. There were several speed bumps along the way that brought about delays, but ICE, which operates the New York Stock Exchange (NYSE), was always certain that it would roll out the platform. Trading began at 8 PM Eastern Time yesterday with an opening trade of $10,115 and, in the first seven hours, only 18 BTC had been traded. The latest trading price was $10,042.50.
The slowed attraction isn’t necessarily detrimental to the success of the platform, nor is it an indication of what lies ahead. Alex Kruger points out on Twitter, “CME [Chicago Mercantile Exchange] bitcoin futures traded $460 million on its first week. Current volume is around $700 million. The Van Eck fake ETF [exchange-traded fund] traded $0 on its first week.”
The difference between CME’s offering and that of Bakkt is that Bakkt is offering physically-traded futures products, while CME provides futures that are settled in cash. The launch of physically-traded futures has at least one investor, Ari Paul, showing a certain insecurity about adoption, stating in a tweet, “Probably a more gradual scale-up since it’s physical. With CME futures, anyone with the right FCM [Futures Commission Merchant] could immediately trade on launch.” He added, “I’d think the incremental demand (beyond CME) would come from people who want to buy or sell physical for delivery, at least at first. Receiving could be instant (use FCM to convert), but I’m kind of thinking depositing physical will be gradual.”
Bakkt will offer two types of contracts – daily futures and monthly futures. Both can be tracked separately on ICE’s website and, while it’s too early to see the results of daily futures, monthly futures activity shows a sputtering launch.
Having support from a company such as ICE could make the difference in the survivability and growth of crypto futures products. If previous predictions hold true, the introduction of the Bakkt platform is going to prove extremely lucrative for the crypto space, with volumes and values skyrocketing. However, it remains to be seen if Bakkt can have that much of an impact.
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