Bakkt smashes previous all-time high, announces Bitcoin options launch

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Bakkt smashes previous all-time high, announces launch of Bitcoin options

Fresh off of a new all-time high, Bitcoin futures exchange Bakkt has announced the launch of Bitcoin options trading on its platform.

A new trading volume record for Bakkt

Wednesday was one for the record books for the fledgling exchange as more than 590 Bitcoin futures contracts, worth 1 BTC each, had changed hands by the end of the trading session (6:00 pm EST).

Based on the last-traded price of US$7,490 [AU$10,980], Wednesday’s trading volume totaled more than $4.4 million.

This marks a new all-time high for Bakkt and a 178% increase over its previous high of 212 BTC.

Bakkt’s performance stands in stark contrast to the Bitcoin market as a whole, which shed more than $10.3 billion from its market cap yesterday as prices plummeted by nearly $600 – from a high of $8,056 to $7,482.

Bitcoin price and market cap (Coinmarketcap)
Bitcoin price and market cap (Coinmarketcap)

Bakkt announces Bitcoin options

On the heels of Wednesday’s performance, Bakkt announced today that it would be launching Bitcoin options on December 9, 2019.

Based on the Bakkt Monthly Bitcoin Futures contract, the options contract will be “the first regulated options contract for Bitcoin futures.”

The new offering is being rolled out in response to customer demand and “is designed to hedge or gain bitcoin exposure, generate income, and offer cost and capital efficiencies.”

According to the official announcement, the Bakkt Bitcoin Options has been self-certified with the Commodity Futures Trading Commission (CFTC) by ICE Futures U.S. – one of three futures exchanges owned by Bakkt parent company Intercontinental Exchange (ICE).

Like Bakkt’s Bitcoin futures contracts, the options contracts will be one for one (one contract equals one Bitcoin) and trading fees will be waived until the end of 2019.

Unlike its Bitcoin futures contracts, Bakkt Bitcoin Options can be cashed out or physically settled.

Bitcoin futures boom

While Bitcoin spot trading has fallen off in recent weeks, futures trading is becoming increasingly popular.

Micky reported on Wednesday that Bitcoin futures trading was outperforming spot trading nearly ten to one.

Research by Skew and BitcoinTradeVolume reported a 24-hour trading volume of more than $9.3 billion for Bitcoin futures compared to just $1.2 billion for spot trades.

Some people are attributing the spike in Bitcoin futures trading to boredom within the spot market due to its relative lack of volatility over the past few months, but the majority of traders within the crypto community seem to think that it is a sign of market maturity.

Mati Greenspan, a senior analyst at eToro, told Micky, “Markets don’t generally trade on boredom.”

“The spate of volatility seems to have inspired further action,” he added, referring to both Bitcoin’s recent price drop and Bakkt’s record-breaking performance yesterday.

Craig Cobb, a veteran trader and host of the popular Trader Cobb podcast, has a similar view, but instead of the market itself maturing, he believes that it could be due to a fresh influx of more mature traders into the market.

“I would have to go with the market getting more mature players within it. If people were getting bored, they would just walk away and not find other places to trade,” Cobb said.

“Many [people] in Bitcoin and crypto seem to think that the financial institutions are ‘out to get them’.

“With this view, it is unlikely that the major [futures] contracts would be traded by the current market participants.”

Can Bakkt keep its momentum going? What do you think is causing the recent increase in Bitcoin futures trading volumes? Keep the discussion going on Twitter.