Bakkt’s main feature is physically delivered BTC futures contracts, which the platform actively marketed before launch. Futures represent an agreement to shop for or sell an asset on a selected future date at a selected price — a crucial risk management tool for volatile markets like crypto.
Although, it's not a completely new concept for the crypto market, as BTC futures are traded since December 2017 on two major U.S.-regulated exchanges — the Chicago Mercantile Exchange and therefore the Chicago Board Options Exchange. However, the offers of both Chicago exchanges are settled in cash, while the ICE-backed platform debuted physical one-day BTC futures contracts.
Bakkt’s launch — underwhelming initially eventually picked up pace
Nine months out from its scheduled launch date, Bakkt finally commenced services on Sep. 23, 2019 after variety of delays. However, despite the prolonged anticipation and analysts’ bullish predictions, the project saw just 71 BTC (about $700,000 at the time) traded within the first 24 hours.
Nevertheless, things soon began to vary , because the trading volume of Bitcoin futures soared to 224 contracts on Oct. 9 — 796% above the previous day. In fortnight , the all-time high rose to 452 BTC futures contracts per day. By the top of the month, Bakkt experienced yet one more boost in volume that drastically dwarfed previous developments: On Oct. 26, the platform traded 1,183 Bitcoin futures contracts, or roughly $11 million, during a single day.
Around the same time, Bakkt decided to maximize the great news, with the firm announcing its plans to launch the primary regulated options contracts for Bitcoin on Dec. 9. within the accompanying handout , the company’s Chief Operating Officer Adam White argued that the physical Bakkt Bitcoin (USD) Monthly Futures that were launched back in September produce a benchmark contract that “provides the inspiration for us to develop complementary products supported the requirements of our customers.”
He added that the choices contracts will comprise of capital efficiency, cash or physical settlement, low fees and European-style options.
New options: What’s on offer to investors?
Indeed, on Dec. 9, Bakkt unveiled two new Bitcoin investment products: Bakkt Bitcoin (USD) Monthly Options and Bakkt Bitcoin (USD) Cash-Settled Futures. consistent with the platform, the monthly options product is that the first Bitcoin derivative instrument regulated by the U.S. Commodity Futures Trading Commission.
As per the announcement, price discovery occurs within a federally regulated market and has no exposure to unregulated Bitcoin spot markets.
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