Everyone is excited for Bakkt, the exchange launched by the Intercontinental Exchange, or the group behind the NYSE. Many were pleased with the initial announcement as it showed that bitcoin had come quite far since its early days.
Bitcoin started in obscurity with conversations between Satoshi Nakamoto and others who were present on an email list. It then slowly grew in stature over the years as it climbed in value.
Officially being embraced by Wall Street meant that bitcoin had grown up and was ready to join the ranks of the Wall Street elite, joining commodities and others that have futures contracts.
Bitcoin wouldn't just be associated with libertarians, Silk Road, Silicon Valley Moguls, and other participants, it would now be present in more ways than one. In fact, its anticipation only grew further as the company pushed back its release dates several times, increasing overall excitement.
But instead of fireworks, the cryptocurrency community saw a dud.
Bakkt was supposed to be a pretty big deal, but the results since its launch were subpar.
Let's find out a little bit more about Bakkt, about futures and what it is all about today.
Intercontinental Exchange Deploys Bakkt To Little Investor Appetite.
Bakkt is a signal of a particular stage of maturity in the cryptocurrency sector. The firm doesn't want to be just an exchange but intends to offer something more. It wants to bring about solutions to help take cryptocurrencies mainstream, allowing individuals to trade and utilize cryptocurrencies to make everyday purchases for all parties.
A Bakkt launch proved several things to different people.
The first point was that of perception and reality. Bakkt proved that bitcoin crossed over a particular psychological line.
Bitcoin is not just for a specific group of people now, it's not some esoteric currency known to a niche group of technologists, cypherpunks, and those in the know. The leading digital asset has crossed over into mainstream media in a big way, is supported by institutions such as Fidelity, E-Toro, Robinhood, SoFi, and others.
Firms such as Overstock created an entire crypto division called the Medici Ventures to facilitate its bitcoin and blockchain ambitions.
Square, a fintech firm, deployed bitcoin trading in late 2017. The company recently launched its crypto-focused division to facilitate the growth of open-source principles, innovation, and great design in the cryptocurrency universe.
Popular books such as Digital Gold and Bitcoin Billionaires allowed bitcoin to enter into pockets of popular culture.
But having an association with the Intercontinental Exchange, a fully regulated and respected entity was still a pretty big deal. It was supposed to signal to traders and investors to come into the bitcoin waters and to speculate with the currency. Bakkt was supposed to show them that everything was fine, and they didn't need to shy away from this digital asset.
Bakkt also proved that bitcoin could be regulated in different aspects and that investors could comfortably invest with a reputable and credible exchange if they chose to do so.
Further, Bakkt wouldn't settle futures contracts in dollars, and it would do so in bitcoin. It would facilitate physically deliverable bitcoin futures contracts, opening up a new avenue for bitcoin traders.
This is what made Bakkt so special.
It wouldn't just provide bitcoin futures in USD like the CME Group, it would take it one step further and physically settle these contracts in bitcoins, traders would receive bitcoin at the end of their future contracts.
Futures contracts are even more exciting because it shows that bitcoin-related financial products are also maturing. Futures contracts are usually seen in soybeans, oil, corn, and other goods.
These contracts, or binding obligations that two parties enter into to divest or acquire a commodity at one specific price over a certain narrow timeframe, allows investors hedge their bets and speculate in additional ways.
The regulated entity, Bakkt, notes that it would provide investors with the ability to speculate in futures monthly or daily.
Additionally, the emerging business even provides insurance on bitcoin stored with it.
Finally, the company is also supposed to serve as another steppingstone to welcome the inevitable institutional herd of money managers and financiers.
Despite these different options and additions, it didn't release to great fanfare.
Alas, it seems that investors are still nervous about dabbling in bitcoin futures.
The Status of Bakkt Trades
A few traders executed contracts on launch day at a price range above $10,000. Bitcoin's price decreased to the $ 9,000's and then increased slightly.
Bakkts’ order book processed two daily futures and more than 70 monthly futures contracts. Trades only took place after quite some time, and reports note it took more than 16 hours for investors to begin trade execution.
The operators of this platform aren't phased by the first day of trading. They still see that this is a milestone and helps to pave the way for further retail investor interest as well as potential institutional engagement.
A representative stated:
"Bakkt is really designed for the institutional trader. So, this is a futures contract. That said, we expect this futures contract to trade through retail brokerages as well, so retail customers can trade this contract."
Representatives of Bakkt also note that it might help in serving as a price discovery tool, helping to make this commodity more market efficient.
No-Risk No Futures
But it is easier to find value in hedging when there's significant volatility. Bitcoin has been trading in the $10,000 range for several months, and it seems that not many people are interested in hedging and making bets on the future if bitcoin acts similar to a blue-chip stock.
Volatility might not be present right now, but bitcoin and volatility have had a strong history, as such, volatility is likely to make an appearance soon.
The ZB Take
The exchange accomplished a great deal over the past two years. Bakkt aims to provide solutions that allow for regulated trading, insured storage, and seamless ways to spend digital assets. It shows that more established industry veterans are interested in adding value, building out infrastructure, and contributing to the growing enterprise of blockchain, and cryptocurrency ecosystem.
About ZB Group
ZB Group was founded in 2012 with the goal of providing leadership to the blockchain development space and today manages a network that includes digital assets exchanges, wallets, capital ventures, research institutes, and media. The Group’s flagship platform is ZB.com, the industry leading digital asset exchange. The platform launched in early 2013 and boasts one of the world’s largest trading communities.
ZB Group also includes ZBG the innovative crypto trading platform, and BW.com, the world’s first mining-pool based exchange. Other holdings include wallet leader BitBank, as well as exchange brands ZBM, ZBX and Korea’s Bithi.
Industry intelligence and standards are headed by the recently launched ZB Nexus who embody the core values of ZB Group and open source their reports and analysis for the public.
Learn more about ZB Exchange by visiting www.zb.com.