Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
Bakkt’s physically settled BTC contracts has seen larger open interest for May expiry in comparison to CME’s cash-settled ones as institutional interest in the crypto market is on a surge.
Intercontinental Exchange’s (ICE) digital asset platform Bakkt is making much faster inroads in the Bitcoin Futures market. With the rising institutional participation, the demand for Bakkt’s Bitcoin Futures is also rising steadily. The latest industry data shows that the physically-settled Bitcoin Futures on Bakkt have surpassed the cash-settled ones offered by CME for the May expiry. The CME Group has been an earlier player and launched its cash-settled contracts in December 2017. On the other hand, it has been just eight months since Bakkt launching its physically-settled contracts in October 2019.
For the month of May, the cash-settled Bitcoin futures from CME recorded $9.3 million in trading volume while the open interest was just at $7.6 million. Bakkt on the other hand recorded the daily physically-settled futures at $43 million. This trend reversal took place just for the month of May. However, throughout March and April, the cash-settled contracts saw massive demand.
This was because the Bitcoin price volatility and correction had underscored investors’ desire for cash. Bakkt’s settlement of its Bitcoin futures contracts in physical BTC is majorly catered towards institutional investors.
In recent weeks, following the global economic meltdown, institutional Bitcoin investment has returned to the spotlight. Even some of the most popular hedge fund players like Paul Tudor are holding 2% net assets in BTC.
At press time, Bitcoin is trading at a price of $9193 with a market cap of $169 billion. After the Bitcoin mining, the BTC price corrected nearly 10% slipping below $9000 last week. However, it has managed a partial pullback for now.
Bakkt Joins Hands with Marsh
Since Bakkt offers physically-settled Bitcoin Futures contracts with delivery in actual BTC tokens, it also provides its own custodial storage facility called the Bakkt Warehouse. With the recent rise in its institutional client portfolio, Bakkt has joined hands with insurance broker Marsh to increase insurance to the tune of $500 for its Warehouse facility.
This is yet another important measure from Bakkt to improve the security of its platform and encourage legit players’ participation. This additional $500 million cover comes over and above Bakkt’s already existing $125 million insurance coverage.
ICE’s Bakkt is also working on a mobile application focused on retail use for which Bakkt has also partnered with two unnamed financial institutions. As per the blog post, Bakkt is eyeing a potential user base of 30 million individuals. “This suite of enterprise loyalty and merchant products has powered the redemption of more than 1.5 trillion points, helping companies put loyalty points to work for consumers,” said Adam White.