After much delaying, ICE’s Bakkt platform finally started testing its Bitcoin Futures today. Bakkt has been working on its Bitcoin Futures contracts for almost a year and investors had been eager for its entry in the crypto market to happen.
From the company they tweeted:
Today kicks off user acceptance testing @ICE_Markets for the Bakkt Bitcoin Daily & Monthly Futures contracts
Testing is proceeding as planned with participants from around the world
— Bakkt (@Bakkt) July 22, 2019
As well as:
Bakkt is bringing trust to digital assets through institutional grade, regulated custody and markets
Learn more: https://t.co/6S5dtEI0l3
— Bakkt (@Bakkt) July 22, 2019
Chief strategy officer of Coinshares Meltem Demirors sent her congrats to Bakkt on the beta launch of their physically settled Bitcoin futures contract.
“The market for Bitcoin is changing, and quickly. Futures, derivatives, and synthetics will fundamentally change the nature of the Bitcoin market. See what happened to gold.”
Twitter community was pretty responsive as expected:
— Crypto Khab (@cryptokhabra) July 22, 2019
— CryptoDjinn 🧞♂️ (@CryptoDjinn) July 22, 2019
Institutional Investors from around the world are now able to test the trading of #Bitcoin via Bakkt
Please, whatever you do, remember that these banks and large institutions do not want to pay $10,000 a coin. They will try things you can’t even imagine to push the price down! https://t.co/qDULJ5vE6m
— Mr Gordon (@MrGordon_UK) July 22, 2019
Let’s just remind you that this was an extremely hard road to success for Bakkt, which was due to launch its platform last November. Then, problems getting the project past regulators showed up and the launch suffered further delays in January.
From the company, they said this launch ushers in a new standard for accessing crypto markets.
“Compared to other markets, institutional participation in crypto remains constrained due to limitations like market infrastructure and regulatory certainty. This results in lower trading volumes, liquidity, and price transparency than more established markets like ICE’s Brent Crude futures contract, which has earned global trust in setting the world’s price of crude oil.”
With this, Bakkt brought many features that institutions would expect in a versatile and broadly accessible market, including block trades; a fee holiday through the end of the year to encourage trading; market maker incentive programs to encourage liquid markets; and integrations with ISVs and regulated brokerage platforms.
Last week, Sam Doctor, the managing director and quant strategist at Fundstrat Global Advisors, said that he thinks full futures trading on Bakkt will launch this quarter. He said:
“There appears to be a critical mass of adopters ready to come on board on Day 1 of the Bakkt launch, with the sales team gaining traction among brokers, market makers, prop trading desks and liquidity providers.”
However, let’s not forget that this isn’t a launch, only testing phase. That’s why we don’t have to wonder why the market hasn’t been up yet. Au contraire – the whole day was pretty much in red for all the biggest cryptocurrenices. At the time of writing, Bitcoin was down 2.43% to $10,230.25.
Nevertheless, it’s obvious that after a successful test the “real deal” could come, which some investors could get in early and speculate on the event itself. Though it won’t be a huge price increase, it could shake things up.
We would like to think that Bakkt will draw resources from some reputable companies with knowledge in fields of risk management and technology to create a federally regulated platform. Once investors feel at ease trading in a regulated environment volatility should smoothen.
Also, by providing a qualified custodian for cryptocurrencies, Bakkt could enable various institutional investors to make investments in the crypto asset class. This is where it gets better. US Congress doesn’t have to be worried as they are in Facebook‘s Libra case because Bakkt’s security solutions include the monitoring of cryptocurrency fraud, ultimately paving the way for mainstream adoption by catering to both institutional and regulatory needs.