Bakkt Futures Showing Worrying Signs, Bulls Beware

Bakkt

Bakkt Futures Showing Worrying Signs, Bulls Beware

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.

Alex tweeted,

“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.

Bakkt
Image: Bakkt

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.

Bitcoin bulls should however not take the exponential growth in volumes traded as a bullish indicator as the physical BTC settled remains very low.

Summary
Number of Bakkt physical settled contracts remains desperately low
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Number of Bakkt physical settled contracts remains desperately low
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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 bulls 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.
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Author: Lujan Odera

Been in the field since 2015 and he still love everything blockchain and crypto! FC Barcelona fan. Author and journalist. Follow him at @lujanodera.

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Lujan Odera 93 Articles

Been in the field since 2015 and he still love everything blockchain and crypto! FC Barcelona fan. Author and journalist. Follow him at @lujanodera.

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