ICE-Backed Bakkt Exchange Rolls Out Cash-Settled Bitcoin Futures And BTC Options Products

On Monday, December 9, 2019, COO of Bakkt, Adam White announced the live action of two new bitcoin contracts: a Bakkt Bitcoin (USD) cash settled futures and monthly options.

As per the blogpost, Bakkt has a benchmark contract that allows them to create products that satisfy customer needs and the aforementioned two products are meant to leverage the contract.

We're live with two new #bitcoin contracts – a cash settled future and options on futures – both fully regulated and leveraging our benchmark @Bakkt Bakkt Bitcoin (USD) Monthly Futures. More here:https://t.co/UZTxLQuKm0

— Adam White (@WhiteAdamL) December 9, 2019

A Quick Look Back in Time

Bakkt launched its U.S. regulated Bitcoin futures product a little under three months ago, only to witness a relatively poor start. As per Ethereum World News (EWN), the first day amounted to $1 million in transaction volume.

Such a trend supposedly continued well into four weeks since their launch. But eventually, the tables have turned for the firm. In particular, things caught on fire on the fifth week, with their transaction volume sitting at roughly $124 million.

Here’s a bar graph depicting the rather exponential trend in Bakkt’s Bitcoin monthly futures’ weekly volume:

This week's summary of Bakkt Bitcoin Monthly Futures:

💪 Total volume: $124.0 million (+89%)
💰 Max open interest: $4.3 million (+218%)@Bottlepay this bot a coffee: https://t.co/MJaZ58oPiu 🤖 pic.twitter.com/zj9Z8cosgM

— Bakkt Volume Bot (@BakktBot) December 1, 2019

Getting back to the newly launched contracts, the monthly options are deemed the first CFTC-regulated option on futures contract for bitcoin founded on the benchmark Bakkt Bitcoin (USD) monthly futures contract. Its settlement is said to take place two days before the ICE Futures U.S. Price discover expires. That said, the entirety of this futures is completed within the regulated market and has nothing to do with unregulated bitcoin spot markets.

Then there’s the Bakkt Bitcoin (USD) cash-settled futures, which is designed to leverage the settlement price on the benchmark Bakkt Bitcoin monthly futures. It is currently available on ICE Futures Singapore, an exchange that delivers to the Asian market.

White describes this move as being an “important milestone in the development of this emerging asset class and our bitcoin product complex.”

Having tweeted the news as well, it seems like not a lot of crypto fanatics are not welcoming the idea with open arms. In fact, Bakkt’s new endeavor is being shut down by harsh words like ‘Bakkt = backed by sh*t’, or ‘The ultimate question of 2019, is @Bakkt good for cryptocurrency,’ among many other slams to the firm.

Why Such Negativity?

When financial market firm, Intercontinental Exchange (ICE) initially announced their plans for Bakkt, many praised them for such an entrance amidst the worries of the overall crypto market and the need for institutional money. The moment their announcements turned into actions, many have since shifted away from the firm.

One of the reasons why this might be was expounded by news outlet, AMB Crypto, in which it seems like Bakkt may have misled investors in terms of being ‘fully collateralized’.

This possible lie was caught by Alex Kruger, who arrived to the conclusion that they were not in fact fully backed, but only 63 percent backed, while the remainder is said to have been backed by US dollars. Regardless, they remain regulated and fully insured. As per Kruger,

“If Bakkt eventually manages to generate meaningful physical demand from institutions, that would be very positive for both the industry and price.”