Bakkt Bitcoin platform for institutional investors from Intercontinental Exchange is planning to start the testing phase of two BTC futures contracts on July 22, 2019.
Adam White, Bakkt chief operating officer, revealed in a blog that Bitcoin futures contracts will set “a new standard for institutional market quality for digital assets” going even further and mentioning the Neil Armstrong’s first ever Moon landing that will celebrate the 50th anniversary on July 20, 2019. The comparison between Bitcoin’s arrival into the market of institutional investors and the accomplishment of landing on the Moon 50 years ago is obvious.
Adam acknowledged that Bakkt brings a great solution to investors looking to accept Bitcoin as a vehicle of investment while building trust in the traditional financial market. Therefore, on July 22 Bakkt will start user acceptance testing for the BTC futures that will be listed and traded at ICE Futures US.
According to data revealed by ICE, there will be two Bakkt BTC futures contracts, one is a monthly contract and one is a daily contract. The contracts will see a minimum price fluctuation of $2.5 per BTC where each contract holds 1 BTC. Settlements for the two contracts will take place at Bakkt Warehouse.
The public is aware that CME already offers BTC futures contracts that are settled in cash. The difference with Bakkt is that these futures contracts are physically-settled in BTC and clients actually receive Bitcoin at the end of the contract and not fiat.
Why is important for the industry to have BTC futures contracts?
The main advantage in having Bakkt BTC futures contracts resides in the fact that the cryptocurrency market is not yet a very big one with a total market cap at around $300 billion. If we compare the crypto space to traditional financial markets, we see there’s still a long way to go for digital assets.
On the other hand, since the present cryptomarket is not that big, we don’t have enough trading volume and liquidity to protect traders and investors from the infamous manipulation attempts that give cryptocurrencies a bad name.
Finally, since Bakkt is controlled by Intercontinental Exchange, the owner of the New York Stock Exchange, we expect a higher level of transparency and trust to attract institutional investors at the table.