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Bakkt set for launch in Q3: Bullish for Bitcoin?

Wall Street’s crypto asset venture, Bakkt, is aiming to launch its bitcoin futures trading platform in Q3/2019. Analysts expect the highly anticipated Intercontinental Exchange-backed platform will attract new flows of institutional money into the industry.

Bakkt plans to go to market with its bitcoin futures trading platform in the third quarter of 2019. However, before the digital asset venture can launch its bitcoin futures offering, the company needs approval for its crypto custody service, Bakkt Warehouse, according to a report by The Block.

Bakkt to launch in Q3, once custody solution is approved

A slide deck obtained by the media outlet states that the New York-based company is still waiting on approval from the New York Department of Financial Services (NYDFS) to run Bakkt Warehouse, which would enable the company to function as a limited-purpose trust company and operate as a qualified custodian for the physical bitcoin underlying its bitcoin futures contracts.

While the company is still waiting for approval of its custody solution, it is reportedly already able to provide the infrastructure needed for investors to receive and deliver bitcoin for U.S. dollars in standardized settlement cycles in a regulated and compliant manner. The physically-settled bitcoin futures contracts will trade on ICE Futures U.S. and be cleared by ICE Clear U.S.

Bakkt plans to launch two bitcoin futures contracts (subject to the regulatory approval of Bakkt Warehouse):

  • Bakkt ™ Bitcoin (USD) Daily Futures Contract
  • Bakkt ™ Bitcoin (USD) Monthly Futures Contract

The daily bitcoin futures will enable traders to transact in a same-day market while the monthly futures will provide traders with the ability to trade the front month and across the forward pricing curve.

Bakkt’s Q3 launch plans were confirmed by ICE CEO Jeffrey Sprecher on an earnings call, when he said, “Subject to final regulatory approvals, we plan to launch our physically-settled bitcoin futures in the very near future.”

Bullish for Bitcoin?

Several industry analysts believe that the launch of Bakkt is bullish for bitcoin.

Sam Doctor, a quantitative strategist at independent research company Fundstrat, says Bakkt could be “a huge catalyst for institutional participation” in the crypto asset markets.

In a tweet on July 19, he shared his team’s takeaways from the recently held Bakkt Institutional Digital Asset Summit at the New York Stock Exchange. The key takeaways were:

  • Bakkt is expected to launch in the coming months
  • CFTC Commissioner Dawn Stump said no cryptocurrency threatens financial stability
  • The CFTC is seeing growing demand and public interest in bitcoin futures
  • BlockTower CIO, Ari Paul, believes retail adoption will be enormous once a ‘killer app’ with good UX comes to market
  • Paul said that inflation resistance and confiscation resistance are key value propositions of cryptocurrencies
  • There is a critical mass of investors waiting for Bakkt to launch

CoinShares Chief Strategy Officer Meltem Demirors shares Fundstrat’s enthusiasm for Bakkt’s upcoming launch.

She said in a tweet on July 22, “Congrats to Bakkt on the beta launch of their physically-settled bitcoin futures contract! The market for bitcoin is changing, and quickly. Futures, derivatives, and synthetics will fundamentally change the nature of the bitcoin market.”

Peter Arendarski, Ph.D., Chief Economist at the Blockchain Board of Derivatives (BBOD), argues that the launch of Bakkt could usher in a new era for crypto assets with a never-before-seen influx of new funds into the asset class.

“Whilst Bakkt’s product offering is still on hold, it is exactly what large financial institutions need to onboard their wealthy clients into the cryptocurrency ecosystem, providing direct exposure to bitcoin as a new asset class. This will lead to the next phase of the cryptocurrency market cycle, with masses of money entering the market unimaginable before,” he told Brave New Coin.

If Bakkt manages to receive regulatory approval to launch its futures trading platform in combination with its custody solution, we could see a substantial jump in the price of bitcoin, especially if the market sentiment is positive at the time of the launch.

Moreover, if Wall Street’s sidelined demand for regulated, exchange-traded bitcoin financial products is as high as has been suggested by the likes of Bakkt, Fidelity, and others, that opens up the possibility for a major bitcoin rally in the remaining months of 2019.


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