Bakkt’s Bitcoin Futures Have Officially Launched
After multiple delays and over a year of questioning, the Intercontinental Exchange (ICE) – which owns the New York Stock Exchange – has officially launched its long anticipated bitcoin futures platform today.
What makes Bakkt Futures unique is rather than having bitcoin futures trades settled in cash like on the Chicago Mercantile Exchange (CME) Group, Bakkt is the first futures platform to settle contracts in physical bitcoin. What’s equally important is the speed of delivery. Unlike most commodities which are typically delivered at least 30 days out, bitcoins will be physically delivered to the client the next day after the contract expires. This offers institutional investors the ability to buy or sell bitcoin in way that’s familiar to them on a federally regulated platform.
Lanre Sarumi, CEO of LevelTradingField – a Chicago-based crypto derivatives exchange operator – said, said that the bitcoin contract is “well-designed”and “The dailies make their offering like the cash market, but with the ability to short. That’s huge.” Sarumi added that “The basis to the cash market would be very tight. It’ll be interesting to see if it’s the lead or the follower. In theory the cash market should dictate the price of the derivatives [futures] market. In practice, it’s the other way around for a lot of commodities.”
The markets are expected to remain calm in the near term, as ICE’s futures contracts will strictly be catering to institutional investors for now. ICE is not looking to target retail investors at this time, which make up the vast majority of traders.