Following a slow start last month, Bakkt’s Bitcoin futures platform picked up steam this week. With Bitcoin posting massive gains yesterday, Bakkt’s volume nearly doubled from its previous all-time high.
The platform tweeted that it has set a new daily record of 1,179 contracts traded. Yesterday, Bitcoin saw a massive swing of 40%, which saw increased activity across all exchanges.
Today we set a new daily record of 1,179 Bakkt Bitcoin Futures contracts traded
— Bakkt (@Bakkt) October 25, 2019
Bakkt’s Slow Start
After a year of delay, Intercontinental Exchange (ICE) finally launched its Bakkt Bitcoin futures platform last month to much fanfare. Institutional investors were expected to come in with their bags full of money. however, that did not happen out of the gate.
On most days, the volume totaled much less than $2 million. However, on Wednesday, it registered a record volume of $4.8 Million, with 640 contracts traded.
ICYMI: Wednesday's Bakkt Bitcoin Monthly Futures:
Traded contracts: 640 (+653%) (New ATH ) Day before: 85 All time high: 640
— Bakkt Volume Bot (@BakktBot) October 24, 2019
Just two days later, it has almost doubled its previous volume to 1,179 contracts traded.
Institutional Interest in Bakkt
While Bakkt’s offering is settled physically, institutional investors are finally starting to embrace it. Economist and trader Alex Krüger pointed out, these contracts are not traditionally popular among institutional investors. 98% of futures contracts are not settled physically.
In finance, 98% of futures are not physically settled as traders do not want to take delivery, even for physically settled contracts.
=> comparing Bakkt with the CME is perfectly fine, particularly so with Bakkt's monthly contract.
— Alex Krüger (@krugermacro) September 24, 2019
Like any other cryptocurrency exchange, Bakkt’s volume soars whenever there is extreme volatility. During the day of its previous high of 640 contracts, Bitcoin lost nearly $1,000. Now, with Bitcoin gaining almost $2,500 overnight, the number of contracts traded has almost doubled.
Opening New Doors
Bakkt is looking to capitalize on Bitcoin markets and is not going to stay quiet with its single offering — it will launch Bitcoin options contracts in December.
It is the first regulated options contract for Bitcoin futures, and has already received approval from the U.S. Commodity Futures Trading Commission (CFTC). The Bakkt Bitcoin options contract will be based on its futures contract. However, customers will have the option to choose the medium of settlement.
Do you think more institutional investors are going to start using Bakkt? Let us know your thoughts in the comments below.
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