Last week, the Intercontinental Exchange (ICE) launched its regulated Bitcoin Futures contracts. While there was a lot of buzz before the launch, Bakkt failed to make an impact on the market.
The Bakkt futures contracts saw very lukewarm response from investors. With one week since its launch, the Bakkt futures contracts have just $5 million in total trading. Bakkt’s Bitcoin futures contracts come in two options – daily and monthly settlement. The daily contracts settlements have received an almost negligible response.
According to the data on the Bakkt platform, around 623 monthly futures contracts were traded in the last one week. Since each contract size comprises of one BTC, a total of 5 million BTC exchanged hands. The daily futures contracts saw an average of fewer than six contracts traded in the last week.
Bakkt Futures contracts create a lot of buzz in the market before launch. The contracts were supposed to drive institutional interest in the market. However, things haven’t turned as expected until now. Analysts at JP Morgan even blamed Bakkt poor show for last week’s Bitcoin price crash. Bakktlost over 20% in the last week with its value hitting a 3-month low below $8000 on Monday, September 30.
Has Bakkt Failed to Lure Institutional Investors?
The Bakkt executives said that its Bitcoin Futures will set a new milestone in the crypto industry. Besides, they were very confident about the Bakkt Futures launch reviving institutional interest in the market.
So has Bakkt failed to drive institutional interest in the market? Dave Weisberger, CEO of CoinRoutes said that it would be too early to say so! Speaking to CoinDesk, he said:
“It takes time for people to move from one place to another unless there’s a cost reason or a liquidity reason. These things tend to develop slowly.”
Note that Bakkt’s futures offering differs from that on CME. While Bakkt’s futures contracts are physically-settled, CME’s contracts are cash-settled wherein you don’t need to take the delivery of the Bitcoin. Su Zhu, the founder of emerging-markets-focused hedge fund manager Three Arrows Capital, says that regulated futures contracts take time for adoption. He thinks that Bakkt’s contracts’ liquidity will first be “a trickle, then a flood”.
Guy Hirsch, the U.S. managing director of eToro, told Bitcoin Magazine:
“I see the hesitance as a ‘wait-and-see’ approach more than a reaction to the structure of the offering. Crypto is still a relatively new asset class and institutions are still learning about the benefits that it offers. These sorts of offerings can often take a long time to play out and gain market share. Expect institutions to cautiously watch each other and ensure that the market infrastructure is in place before making any commitments.”
