Bakkt Bitcoin futures
Following several delays due to regulatory concerns, Bakkt, a subsidiary of the Intercontinental Exchange (ICE), finally received the green light from the U.S. Commodity Futures Trading Commission (CFTC) to launch its Bitcoin futures.
Unlike other BTC futures contracts such as the Chicago Mercantile Exchange (CME), which is only settled in U.S. dollars, Bakkt Bitcoin futures will settle using real Bitcoin at contract expiry. As a result, the firm recently began accepting Bitcoin deposits into its “warehouse,” which is protected against malicious activity by a $125 million insurance policy.
The Bakkt Warehouse is active for futures
Bitcoin deposited at our Warehouse is protected by a $125 million insurance policy
— Bakkt (@Bakkt) September 9, 2019
Bakkt will become the first company in the cryptocurrency industry to introduce physical-settled Bitcoin futures contracts. This could trigger a significant inflow of institutional capital and liquidity into the space. For the first time, investors will have the opportunity to operate within a “federally regulated exchange,” according to Bakkt CEO Kelly Loeffler.
If successful, Bakkt could be able to capture a substantial share of Bitcoin’s trading volume allowing it to create price discovery. Consequently, the firm could bring more regulatory clarity and trust into the market, which is essential for institutions to invest in the space, said Thomas Lee, the head of research at Fundstrat Global Advisors.
Bitcoin price analysis
In fact, the Bollinger bands on the 1-day chart are squeezing, which is indicative of indecision in the market. Squeezes are typically followed by periods of high volatility. The longer the squeeze the higher the probability of a strong breakout. Thus, the range between $10,500 and $9,600 is a reasonable no-trade zone.
A break above $10,500 and the 100-day moving average could lead to an upswing that takes Bitcoin into new yearly highs. Meanwhile, a break below $9,600 and the 150-day moving average could take BTC to retest the support given by the 200-day moving average. If that support fails, the next barrier that could hold the price of Bitcoin from a further decline sits around $7,500 and $6,000.
Bakkt is set to launch its crypto-settled futures contracts on Sept. 23, and its impact on Bitcoin’s market valuation is yet to be seen. Thus far, BTC remains in a consolidation period that started three months ago, but indicators are signaling that a major price movement is underway. Waiting for a clear break out of the no-trade zone previously explained will be ideal for investors to reduce risk exposure.