The long-awaited launch of the Bitcoin Futures on the trading platform Bakkt is approaching. In the following article we will give you an overview of everything worth knowing and why the launch could be so important for Bitcoin and the cryptocurrency industry.
More than a year after the Intercontinental Exchange (ICE), which also owns the New York Stock Exchange, announced that it would create an institutional infrastructure for trading Bitcoin, the vision is now becoming a reality. ICE’s proprietary trading platform Bakkt will become operational on September 23, 2019, when Bakkt, in partnership with ICE Futures U.S. and ICE Clear US, will launch the physical delivery of daily and monthly Bitcoin Futures contracts.
The event will create a big wave in the crypto community because, unlike other Bitcoin futures, the Bakkt contracts will be settled with real Bitcoin at expiration. After the CME Group and the Chicago Board Options Exchange (CBOE) offered Bitcoin futures for the first time in December 2017, which were settled in cash, the physical delivery represents another milestone for Bitcoin, as Bitcoin futures can be purchased through a Wall Street company for the first time.
The milestone continues to be significant because the Bakkt futures are primarily targeted at institutional investors. The combination of traditional financial instruments with cryptocurrencies should enable them to easily enter the crypto ecosystem. Another advantage of forward contracts is that the institutions can bet on a rising or falling Bitcoin price. Many experts therefore expect a significant inflow of institutional capital and liquidity.
And this is how Bitcoin Futures trading works
At the launch Bakkt will offer two futures contracts: a daily and a monthly BTC futures contract. Trading hours will be between 20:00 and 18:00 (next day) with a daily settlement window from 16:58 to 17:00. The size of a contract corresponds to a Bitcoin (1 BTC) with a minimum price fluctuation of USD 2.50 per contract. Both futures contracts do not require pre-financing or 100 percent collateralization by investors, as originally planned by the ICE.
The Bakkt Trust Company, a custodian bank responsible for Bitcoin’s storage, was established to hold the BTC. In August 2019, Bitcoin received a license from the New York State Department of Financial Services. On 6 September, the custodian bank was officially put into operation so that customers could deposit Bitcoin into their accounts and familiarise themselves with the process before 23 September.
Bakkt Warehouse custody is live.
Now accepting customer bitcoin deposits and withdrawals. Only 17 days until the Bakkt Daily and Monthly Futures contracts launch on Sep 23.
— Bakkt (@Bakkt) September 6, 2019
The first signs of activity and the possible volume of Bitcoin at Bakkt were already evident on September 5 when Whale Alert reported that 94,504 Bitcoin had been transferred to a BTC address that could not be assigned to a cryptocurrency exchange. As some people in the crypto community suspected, the transaction could be related to the launch of Bakkt’s Bitcoin futures, as it originated from various addresses and is now the largest Bitcoin address that cannot be assigned to an exchange.
? ? ? ? ? ? ? ? ? ? 94,504 #BTC (1,018,147,922 USD) transferred from unknown wallet to unknown wallet
— Whale Alert (@whale_alert) September 6, 2019
More transparency for the crypto market?
The transaction could also be an indication for more liquidity on the crypto market. The ICE hopes that the Bakkt Bitcoin Futures will reduce Bitcoin pricing and manipulation in Bitcoin spot trading if Bakkt succeeds in generating a significant portion of Bitcoin’s trading volume.
This could not only be positive for the ICE, but also bring more clarity and security to the cryptocurrency industry. In the past, the American Securities and Exchange Commission (SEC) had demanded this several times in connection with the approval of a Bitcoin ETF.