By
Steve Muchoki
February 15th, 2024
Bakkt recently said it wanted to expand the usage and recognition of digital assets – including central bank digital currencies and NFTs.
The trading debut of Bakkt Holdings Inc, a digital assets platform owned by Intercontinental Exchange (ICE), underperformed on the NYSE. Bakkt (NYSE: BKKT), started publicly trading on Monday upon completing its SPAC merger with VPC Impact Acquisition Holdings on October 15. Bakkt CEO Gavin Michael issued a statement heralding the company’s inaugural public listing:
“Today, Bakkt’s vision – to connect the digital economy – reaches new heights, and we’re excited to continue our momentum as a public company,”
However, BKKT stock had an uneventful opening as its shares suffered a drawdown of over 6%.
The exchange, founded in 2018, first offered its shares at $9.45 on the morning of October 18th. Its price subsequently rose 3.3% to $9.77 in quick fashion within 30 minutes of trading, prompting traders to take profits – seemingly prematurely. This resulted in a BKKT price slump of 9.5% to $8.84 by lunchtime. BKKT ended up closing the trading day at about $8.76, according to Bloomberg.
Bakkt’s Antecedents Prior to Its NYSE Trading Debut
Intercontinental Exchange initially created Bakkt as a crypto custodian even though Bakkt has since ventured into progressive Bitcoin futures contracts. Furthermore, it also launched a retail crypto asset payments app, and partnered with travel and leisure companies. Some of these hospitality outlets include Choice Hotels and Starbucks, which allow their customers to use Bakkt’s app for certain services. For instance, customers may convert loyalty points into cash or purchase a cup of coffee.
Earlier in the month, Bakkt announced that it was partnering with Google. This collaboration will enable the former’s retail app users to use Google Pay to make payments from their digital asset balances.
Despite the trading debut setback, Bakkt still stands to profit overall. The newly-approved US Bitcoin ETF coming to markets this week focuses on futures. What this means is that Bakkt can benefit from the slew of Bitcoin-linked financial instruments. This is because hedge funds and other institutional investors can use Bakkt’s custodial service to store their digital assets.
Bakkt recently said it wanted to expand the usage and recognition of digital assets – including central bank digital currencies and NFTs. Furthermore, the company showed favorable optics for crypto growth in a June investor presentation.
ICE’s History with Crypto-Oriented Businesses
Bakkt is not Intercontinental Exchange’s first foray into crypto. The firm previously participated as the lead investor in Coinbase’s Series C $75 million funding round, which took place in January 2015. Just like Bakkt, Coinbase also incurred a bearish performance on its first day of public trading. The prominent exchange platform started at $381 but subsequently dropped a total of 13.8% over the course of the day.
In early 2021, Intercontinental Exchange ended up selling its stake in Coinbase for $1.2 billion. The company made the decision to short all of its 1.4% equity to reduce debt. Furthermore, ICE chief financial officer Scott Hill, noted that his company ended up with about $900 million net after taxes.