The volume of physically settled BTC futures has seen exponential growth in the past few weeks since launch in September. The euphoria building up across the Bitcoin bull market due to the growing institutional interest however should be toned down a bit according one analyst given the low volume of physically settled monthly contracts on Bakkt.
Physically settled BTC futures remain low despite volume exploding
Having set yet another high in BTC Futures volumes traded on November 23rd, surpassing $20 million dollars, Bakkt enthusiasts are rejoicing at the explosive institutional interest in the futures. However, according to Alex Kruger, a Colombian economist and crypto trader, a hike in volume should not excite bulls as it is the volume of physical bitcoins settled that matters.
“Volume is growing exponentially. From a low base, but growing fast nonetheless. But what makes Bakkt special for bulls is not its volume, but how many bitcoins are physically delivered.”
Looking at the data, only 17 monthly contracts were physically settled on November 14 signaling a slight rise in the futures since October. The depreciating value of Bitcoin from highs of $10 K to sub-$7,500 levels during the month further accelerates the bearish stance in BTC’s future.
No Daily Settled Contracts Since September
Bakkt monthly contracts ‘settled volume’ may be struggling but the daily futures contracts are practically non-existent. The daily contracts are usually for traders who wish to buy BTC and store the assets in a regulated warehouse.
Since September, the daily BTC Bakkt futures, have had a total of ZERO contracts settled during the period to date apart from two lucky days whereby 1 BTC was traded in each day.
Future of Bakkt futures?
While Intercontinental Exchange (ICE) continues to spread its products across Asia and other parts of the world, the volume of physically settled contracts is expected to spike in the coming months. The exponential growth in paper value trading on Bakkt is however a good sign for the overall Bitcoin market.
Zero everyday, with the exception of two days in September, in which 1 bitcoin was delivered each day.
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.
— Alex Krüger (@krugermacro) November 27, 2019
Bitcoin bulls should however not take the exponential growth in volumes traded as a bullish indicator as the physical BTC settled remains very low.