Bakkt Bitcoin Futures Volume Might Be Dampened By Unwilling Banks
Bakkt’s launch didn’t have the firepower that most retail participants were expecting. The contract is currently running with approximately 60 BTC of volume. By close Monday, a total of 72 BTC were traded on Bakkt. The trading represents 1/75 the volume seen in December 2017 when CME’s cash-settled futures launched, which saw notional contracts of 5,298 BTC traded on open day
Investors expected institutional money to come through immediately while completely ignoring what the real value behind Bakkt’s launch is. Smart money is always powerful money. And smart money doesn’t exactly like unhedged, directional bets in a hyper volatile asset class.
Bakkt weathered a series of delays in bringing the product to market, ultimately launching 10 months later than scheduled after regulatory hiccups prevented the company from obtaining a trust license from the New York Department of Financial Services (NYDFS), key to its qualification as a regulated custodian.
ICE spokesman Damon Leavell said in an email:
“We do have a handful of FCMs expected to support the launch. We had strong support from our day one traders,” he said yesterday in response to questions. The first physical delivery of Bitcoin will take place on Wednesday and we continue to onboard trading and clearing firms.”
The idea behind Bakkt is to hedge your income from Bitcoin, so other than entities truly using Bitcoin transact, the other actors would just be those hedging their long spot positions and speculators.
We can be sure that these initial hurdles will be surpassed. Bitcoin has gone from peer to peer cash to an investment product. There is still a long way to go, especially when it comes to the utility for masses.