Has Bakkt Bitcoin futures been a hit or a flop? 12 BTC was traded in the first 3.5 hours but founder says ‘moonshot’s’ success could take months to judge.
Just after 10am AEST, the first physically settled Bakkt Bitcoin futures contract was taken out on ICE Futures U.S
The first monthly contract, up on October 19, was for $10,115 and most of the trades so far have been within about $100 or so of the current price (all have been higher).
As of 2.15pm AEST there were no daily futures contracts.
It is worth bearing in mind that it’s Sunday night, into the early hours of Monday morning, in America, so hardly prime time for trading.
UPDATE 4.45pm: After 6.5 hours 18 BTC has been traded, with the most recent monthly contract $9972.50. The Bitcoin price has fallen to $9934.
It’s too early to say if Bakkt is a hit or a flop just yet – though it’s already traded three time as many BTC as the flop VanEck-SolidX BTC “ETF” managed in a fortnight.
But a new poll suggests opinion in the crypto community is pretty much evenly divided.
The first Bakkt Bitcoin Futures trade was executed at 8:02pm ET at a price of $10,115
— Bakkt (@Bakkt) September 23, 2019
Massive hopes riding on its Bakkt
There are enormous hopes riding on the much delayed launch of Bakkt, which some believe will trigger a huge wave of institutional investment and mainstream adoption.
Bakkt is owned by ICE, a $52 billion market cap trading colossus that owns the NYSE and a bunch of other platforms.
Many pundits believe physically settled Bitcoin futures will enable better price discovery and smooth out volatility.
Bakkt Monthly Bitcoin Futures will establish prices extending 12 months into the future.
@Bakkt is officially live!
Reminder, the hype is bakkt with substance.
Unlike other futures exchanges, this is settled in bitcoin. Actual bitcoin is paid out, not just the fiat equivalent to the price of bitcoin.
The result is better price discovery and liquidity for bitcoin.
— Rhythm (@Rhythmtrader) September 23, 2019
BTC price already baked in Bakkt launch … maybe
Bitcoin investors will be hoping the Bakkt launch news was already baked into the price some time ago, as Bitcoin is trading 3.7% lower than a week ago and barely responded to the launch today (so far, but give it time).
ICE founder and CEO Jeff Sprecher sees Bakkt as “something of a moonshot” and told Fortune a couple of days ago that it will take weeks or months before Wall Street judges it a hit or a flop.
“It’s like opening night,” he said. “Everyone is nervous.”
Sprecher said it was as yet unknown whether the strong interest the platform has generated will turn into action.
“It’s not demand yet, it’s intense curiosity,” he says.
“It’s the sense that money managers want to be at the front of this train and not left out.
“The day-to-day news covers Bitcoin when the prices goes way up or way down, but underneath we see sophisticated people investing in infrastructure and compliance that’s unrelated to the price. But they won’t use that infrastructure, there won’t be true global acceptance, until we can build out the rails in a regulated manner.”
Enthusiasm for Bakkt has waned
The enthusiasm in the crypto community for Bakkt was sky high in late 2018 when it was first announced, but has since died down as the ongoing delays in launching the platform stretched on for most of a year.
A Twitter poll of 2777 people by crypto analyst Alex Kruger yesterday found that opinion was pretty much evenly divided between those who thought Bakkt would be a hit, and those who thought it would flop.
49% voted “flop” while 51% voted for “successful launch”.
As Twitter polls are self selecting, the results should be taken with a grain of salt however.
CME bitcoin futures traded $460 million on its first week. Current volume is around $700 million. The Van Eck fake ETF traded $0 on its first week.
How much volume will Bakkt attract is a key variable for the week ahead. Would you expect Bakkt to flop or to launch successfully?
— Alex Krüger (@krugermacro) September 22, 2019
Ari Paul, from Thecryptocurrencyinvestor.com, suggested a slow launch was likely given Bakkt’s futures are physically settled.
“Probably a more gradual scale up since it’s physical. With CME futures, anyone with the right FCM could immediately trade on launch.
Three Arrow Capital co-founder Shu Zhu said he hadn’t expected enormous volumes on day one, but believed it will build.
“Bakkt will be likely first a trickle and then a flood. The reality is that most regulated futures contracts get low adoption on day 1 simply b/c not all futures brokers are ready to clear it, many ppl want to wait and see, the tickers are not even populated on risk systems, etc.”
Bakkt will be likely first a trickle and then a flood. The reality is that most regulated futures contracts get low adoption on day1 simply b/c not all futures brokers are ready to clear it, many ppl want to wait and see, the tickers are not even populated on risk systems, etc.
— Su Zhu 🦁 (@zhusu) September 23, 2019