Wow! The Intercontinental Exchange (ICE) announced that it will launch a cryptocurrency trading exchange, Bakkt, on Dec. 12.
Assuming this platform gets regulatory approval, then just six weeks from now, ICE will be able to offer Bitcoin futures contracts. Most importantly, it will physically hold enough Bitcoins in its Digital Asset Warehouse to back up these contracts.
In other words, traders can cash out of their futures products and receive Bitcoin instead of cash.
“Each futures contract calls for delivery of one Bitcoin held in the Bakkt Digital Asset Warehouse, and will trade in U.S. dollar terms,” says ICE in a press release.
Yes, each futures contract will be collateralized with a corresponding amount of Bitcoin.
For those of you not familiar with ICE, it is the parent company of the New York Stock Exchange — the largest stock exchange in the world.
ICE’s entry into the crypto market is a game-changer because high-net-worth and institutional investors — who control the BIG dollars — will soon have a cryptocurrency investment vehicle that they know, understand and trust.
More importantly, I expect this to generate a huge amount of trading volume. That’s because this opens the floodgates for mutual funds, hedge funds, Exchange-Traded Funds and pension funds to invest in cryptocurrencies.
This, in turn, means the next crypto bull market will be driven by institutional investors and not more emotional retail investors.
A side-but-important benefit is that this increase in trading liquidity will reduce wild price swings that have so far defined the crypto market.
And while Bitcoin has some of the slowest verification processes of all cryptocurrencies, it is clear that Bitcoin is Wall Street’s preferred crypto storehouse of value. So, it wouldn’t surprise me to see the price of Bitcoin soar shortly, too.
Does that mean you should rush out and buy Bitcoin tomorrow morning? If you have some cash set aside for high-risk and potentially high-reward speculative opportunities, this may be a good time to put that money to work.