Temporal: Enterprise Solution for Distributed Data
· ·

Bakkt Bitcoin futures launch volumes 75 times smaller than CME’s first day

Bakkt Bitcoin futures launch volumes 75 times smaller than CME’s first day

The first day of Bakkt’s Bitcoin futures saw less than 2 percent of the CME’s debut day trading volume, prompting speculation over whether the highly anticipated contract will deliver on its mission of being a “key piece of infrastructure” in the cryptocurrency market.

By close Monday, a total of 72 BTC were traded on Bakkt. The trading represents 1/75 the volume seen on December 2017 when CME’s cash-settled futures launched, which saw notional contracts of 5,298 BTC traded on open day, noted Alex Kruger.

Just 1 of Bakkt’s 72 BTC volume was traded on the daily contract, the company’s initially announced flagship offering with all other volume taking place on the monthly futures market.

What’s the hold-up?

Since its announcement in August 2018, the physically delivered futures product has been promoted by InterContinental Exchange-owned Bakkt as the answer to “trusted price formation” in the crypto futures markets, undoubtedly in contrast to its cash-settled competitor CME (with CBOE, the only other regulated BTC futures product, shuttering in March 2019.)

Bakkt weathered a series of delays in bringing the product to market, ultimately launching 10 months later than scheduled after regulatory hiccups prevented the company from obtaining a trust license from the New York Department of Financial Services (NYDFS), key to its qualification as a regulated custodian.

CME with its cash-settled product poses a worthy rival in the regulated Bitcoin futures market, traditionally seeing robust and steadily increasing volumes. In August the company hit headlines when trading was up 130 percent year-to-date with an average daily volume of 7,237 contracts, or 36,185 BTC, and shortly after announced it would be adding Bitcoin options contracts in 2020.

As such the success of Bakkt’s contract has been widely supposed to depend on institutional interest in Bitcoin exposure. Physical delivery is a unique feature in the futures market, as pointed out by Kruger.

Alex Kruger on Twitter
Source: Twitter

Physically settled Bitcoin futures may be fundamentally more useful than cash-settled contracts to key market participants. According to Genesis Capital CEO Michael Moro, the nature of the product gives market-makers a pure hedge in the eyes of the U.S. Securities and Exchange Commission (SEC), something the CME contract cannot deliver.

Granted, it may entirely unreasonable to measure against the explosive debut of the CME product—success which has been suggested by many to have been fuelled by institutions aiming to collapse push down the price of Bitcoin from its all-time-high for a tidy profit.

Bitcoin | BTC

Updated: Nov 7 at 2:51 am PDT
$8,490.53
13.21%

Bitcoin, currently ranked #1 by market cap, is up 13.21% over the past 24 hours. BTC has a market cap of $152.94B with a 24 hour volume of $24.75B.

Chart by CryptoCompare

Bitcoin is up 13.21% over the past 24 hours.

Posted In: , Price Watch

The above advertisement is an affiliate link. CryptoSlate will earn a small commission if you sign up.

Like what you see? Subscribe to CryptoSlate

Get our daily newsletter containing the top blockchain stories and crypto analysis straight to your inbox.

Sign up to stay informed
Jonnie Emsley
Author

Jonnie Emsley

Journalist @ CryptoSlate

Jonnie Emsley is a freelance writer and blockchain enthusiast based in Ho Chi Minh City, Vietnam. Discovering new corners of Southeast Asia and emerging cryptocurrencies give him a buzz like none other.

View author profile

Commitment to Transparency: The author of this article is invested and/or has an interest in one or more assets discussed in this post. CryptoSlate does not endorse any project or asset that may be mentioned or linked to in this article. Please take that into consideration when evaluating the content within this article.

Disclaimer: Our writers' opinions are solely their own and do not reflect the opinion of CryptoSlate. None of the information you read on CryptoSlate should be taken as investment advice, nor does CryptoSlate endorse any project that may be mentioned or linked to in this article. Buying and trading cryptocurrencies should be considered a high-risk activity. Please do your own due diligence before taking any action related to content within this article. Finally, CryptoSlate takes no responsibility should you lose money trading cryptocurrencies.