The much-awaited launch of futures contracts that are settled in BTC finally has a date to it. On September 23, 2019, Bakkt will launch futures contracts with warehousing infrastructure to allow for high-grade institutional trading and hedging. FTX and Beaxy have futures contracts, but this is merely used for speculation as it is ultimately settled in cash. With the introduction of futures that can be settled in bitcoin, institutional investors who were skeptical of having pure long exposure can fearlessly enter the market, August 16, 2019.
Regulatory Aspects and Contract Specifications
Bakkt’s futures offering has been given the go-ahead from the Commodity Futures Trading Commission (CFTC) as per the guidelines of the self-certification process. Earlier this year, Bakkt began the user acceptance testing phase and this has evidently gone smoothly for the company to finally confirm a date for the alpha launch.
Cryptocurrency exchanges and financial services companies that cater to American markets usually stay away from the state of New York as local regulators there are much more stringent.
Bakkt has gained approval from the New York State Department of Financial Services (NYDFS) to launch its services for residents of the state. With the incorporation of Bakkt Trust, a custodian that runs the Bakkt Warehouse, physically delivered bitcoin futures are coming to all of the U.S.
The digital asset market has grown remarkably in terms of the participants and platforms. Deficiencies in the space are overhyped, but that is expected when the technology is so young and hardly touching the masses yet. That being said, Bakkt believes most of the development and growth has been directed towards the retail segment, while their product focuses on reining in institutions.
What This Could Mean for the Market
Believe it or not, the cryptocurrency market has become much more resilient to major events relative to two years ago. When the SEC initially rejected the bitcoin ETF, the entire market tanked. This time, the market was fine but saw a high volume sell off a few days later.
Partnership and airdrop announcements no longer have the same profound effect on low cap altcoins that was witnessed in 2017.
While Bakkt’s launch is definitely a bullish indicator and signals the potential for billions more to pour into bitcoin, trading events like this isn’t as fruitful as it once was.