The much anticipated Bakkt ‘Bitcoin [BTC] futures contracts’ is scheduled for launch on 23rd September 2019. While these are not the first regulated Bitcoin [BTC] futures contract with BitMEX and CME currently leading the space, Bakkt’s is one-up on all existing platforms.
The Bakkt contracts will be margined and as mentioned before – can be settled using Bitcoins itself. Hence, it can also be used as an alternative to unregulated spot markets as it has custody arrangements as well. Moreover, Bakkt will offer:
• Bakkt Bitcoin (USD) Daily Futures
• Bakkt Bitcoin (USD) Monthly Futures
The CME provides only monthly Bitcoin Futures contracts. The daily contracts would likely increase the volatility in the everyday price of Bitcoin. Nevertheless, the regulated platform will improve the fundamentals around Bitcoin [BTC] massively.
Rhythm, a crypto-trader talked about the advantage of Bakkt over CME and its effect on Bitcoin markets, he tweeted,
Unlike other futures exchanges, this is settled in bitcoin. Actual bitcoin is paid out, not just the fiat equivalent to the price of bitcoin.
The result is better price discovery and liquidity for bitcoin.
Kelly Loeffler, the CEO of Bakkt, told the media, that the core service Bakkt will offer is “secure, regulated custody,” alongside its institutional-scale trading.
The monthly futures contract on Bakkt is based on “forward pricing curve” for investors, giving them an option to see prices up to 12 months. She specifically talked about the halving schedule due next year; which will be enabled for speculation through the monthly contracts.
Furthermore, as the daily contracts are margined, it will provide a lot of space for institutional money to get involved in the day to day activities around it.
The Bakkt launch data announcement has had an extremely positive effect on the Bitcoin’s price. The price of Bitcoin at 3: 30 hours UTC on 20th August 2019 is $10,800. Bitcoin has gained about 6% since the announcement.
Do you think that daily futures contracts will increase the volatility or decrease it? Please share your views with us.
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Nivesh from Engineering Background is a full-time Crypto Analyst at Coingape. He is an atheist who believes in love and cultural diversity. He believes that Cryptocurrency is a necessity to deter corruption. He holds small amounts of cryptocurrencies. Faith and fear are two sides of the same coin. Follow him on Twitter at @nivishoes or mail him at nivesh(at)coingape.com