Bakkt Has Slow Debut But Bitcoin Volume Will Rise Over Time, Here’s Why
Trading appears to be off to a positive start on Bakkt following its launch late yesterday. The same cannot be said for Bitcoin which at the moment is experiencing a lull in volume and volatility.
Bakkt Bitcoin Volume to Increase Over Time
Launching a major institutional investment product for a relatively new asset is not without risk. The Intercontinental Exchange has clearly accepted that and early impressions for its physically delivered futures products are positive.
Following months of anticipation Bakkt Bitcoin futures finally got off the ground a few hours ago enabling investors to dabble in both the contract and the actual asset. James Putra, head of product strategy at TradeStation Crypto, told Bloomberg that investors can potentially profit first from the rise in the futures price and then take possession of the physical Bitcoins.
He added that the move to centralize and create a scalable infrastructure for crypto asset investment is a positive step. The sentiment has been shared by many industry observers from Fundstrat’s Tom Lee to crypto warlord John McAfee.
CEO of FX Hedge Fund Three Arrows Capital and Co-Founder of Sensus Markets, Su Zhu, commented that adoption on day one is usually low but it could grow into a flood.
“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.”
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
At the time of writing 17 BTC had already been invested into the Bakkt monthly contract and volume was increasing. While this is a good start, it really is just the beginning and the first day is not going to be indicative of the success of the products.
Computer scientist and cryptographer Adam Back compared the launch to that of the CME back in December 2017. The first day was pretty slow there also but volume built as the product matured.
“Bakkt adding a new way to buy Bitcoin, adds a regulated market more institutions can use. but we won’t really “find out tomorrow” as it takes time for companies to setup accounts, decide trading strategies & for volume to build. recall CME futures open vs today’s growing volume.”
Even mainstream media has been bullish on Bakkt, holding back on the FUD that they usually associate with Bitcoin and crypto markets.
At the time of writing BTC itself had resumed its decline, falling back below the psychological five figure level and trading around $9,950.
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Martin Young, Khareem Sudlow