Bakkt’s Bitcoin futures
Bakkt, a subsidiary of the Intercontinental Exchange (ICE), was recently granted approval from the U.S. Commodity Futures Trading Commission (CFTC) for crypto-settled Bitcoin futures. These contracts are meant to allow institutions to gain exposure to Bitcoin while acting as a tool for more sophisticated trading strategies.
Unlike existing Bitcoin futures contracts from the Chicago Mercantile Exchange (CME), which are only settled in cash, this will be the first physical Bitcoin-settled futures on the market.
Several analysts, such as @Rythmtrader, believe that this could be the catalyst that takes cryptocurrencies into the mainstream, bringing institutional capital and liquidity into the space.
Remember, 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 and everyone in the space.
— Rhythm (@Rhythmtrader) August 28, 2019
ICE CEO Jeff Sprecher also expects Bakkt to become a major part of the firm’s revenue.
“That infrastructure has attracted a lot of very, very interesting companies that have come—some that have invested in Bakkt, some are just working with Bakkt to try to tap into that infrastructure for some new use cases that will involve blockchain and digital assets and other things that we can provide these people… So it’s a bit of a moonshot bet and it’s been organized in a manner that is very different than the way ICE typically does business,” said Sprecher.
Bakkt recently announced that it will start offering a secure storage for its customer’s Bitcoin on Sept. 6 to prepare for the upcoming launch.
On Sept 6, our Warehouse will begin offering secure storage of customer bitcoin to prepare for the launch of Bakkt Bitcoin Daily & Monthly Futures when they launch on Sept 23
These contracts will enable physical delivery of bitcoin with end-to-end regulated markets and custody
— Bakkt (@Bakkt) August 28, 2019
Bitcoin technical analysis
As the launch date approaches, a symmetrical triangle appears to be developing on BTC 1-day chart. This technical formation represents a period of consolidation before the price is forced to breakout in a positive or negative trend. A move above the upper trendline marks the start of a new bullish trend. Meanwhile, a move below the lower trendline indicates the start of a new bearish trend.
By measuring the distance between the initial high and low, the symmetrical triangle predicts a 34.50 percent target in both directions that coincidentally terminates on Sept. 23, the day Bakkt is expected to launch its Bitcoin futures.
Due to the opposing views that the symmetrical triangle presents, the Fibonacci retracement indicator can also be used to determine the different price levels that could lead to breakout of the pattern. A break above the 23.6 percent Fibonacci retracement area ($11,300) could result in an upswing that takes BTC up to $14,250. Conversely, a move below the 38.2 percent Fibonacci retracement zone ($9,770) could lead to a breakdown of the pattern that takes Bitcoin to test the 65 percent Fibonacci retracement level, $6,880.
According to a report published in May 2019 by Fidelity Investments, cryptocurrency trading volume is dropping significantly. Meanwhile, institutional investment in the industry is on the rise and will continue to grow over the next 5 years. Bakkt will set the stage for an influx of capital that allows Bitcoin to reach new yearly highs as trading volume increases.
In the meantime, it seems like Bitcoin is going through another shakeout before the trend continues.