Bakkt Continues to Disappoint, Despite Growing Institutional Interest

The records have improved marginally since with the volume subsequently going up to 20 BTC midway through the day, although the broader trend of a subpar performance persists.

Barely Hitting a Daily Average of $500k

Bulls counting on Bakkt to take BTC price to new highs were pleasantly surprised on Oct 9 after it registered an all-time-high interday figure of 224 contracts, up a whopping 800% compared to the day prior, as BeInCrypto has previously reported. The joy was short-lived, though, as the volume dipped more than 51% to 109 contracts on Oct 10 and then slipped further 46% the next day. The trend has remained more or less the same since then, with monthly futures worth around $500k being traded on average per day.

Wednesday's Bakkt Bitcoin Monthly Futures:

💸 Traded contracts: 59 (-25%)
📉 Day before: 79
🚀 All time high: 224

*bleep blop* tip sats: https://t.co/TF6sNUwWpO 🤖 pic.twitter.com/xxvHGw1Wn9

— Bakkt Volume Bot (@BakktBot) October 17, 2019

There’s no sure shot way to pinpoint to what fueled the sudden spike on Oct 9. In all likelihood, Bitcoin’s own price movement played a part in it, considering that the asset has surged about $400 to $8,600 per unit on the previous day.

Institutional Interest Is up Despite Bakkt’s Subpar Performance

Expectations were high ever since the Intercontinental Exchange announced last year that it was planning on launching a platform for physically-settled Bitcoin futures contracts. It was a first-of-its-kind offering, after all — quite unlike any of the previously launched cash-settled BTC futures contracts. Bitcoin bulls were optimistic that the introduction of physically-settled contracts would draw an increasing number of institutional investors into the asset class, adding to BTC’s momentum. However, after the initial setbacks, many seem disheartened that it was not the case. But a new report by digital assets manager Grayscale has somewhat quashed that negativity by claiming that institutional interest in the decentralized digital economy is indeed on the rise. The report states that a whopping 84% of the total investment flowing into the firm came from institutional investors – especially hedge funds.

Why is Bakkt Underperforming?

So why has Bakkt failed miserably so far to take off as expected despite growing institutional interest? Well, as BeInCrypto had reported earlier, one plausible factor at play could be Bakkt’s uniqueness in the sense that it offers physical delivery of Bitcoin. Analysts such as Alex Kruger are of the view that most institutional investors aren’t yet ready to cozy up to physically-settled contracts — especially when it comes to Bitcoin or other digital currencies which generally tend to be volatile and highly speculative.

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

Meanwhile, it is also possible that the hype surrounding Bakkt was a little overblown right from the start considering that it is offering a speculative product that’s more suited towards making an incremental impact. Do you see Bakkt improving its stats in the weeks ahead, considering that institutional interest in the asset class is still on the way? Share your thoughts in the comments below.

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