Cryptocurrency Derivatives Series: Bakkt's Futures As Catalyst For Bullish Bitcoin

Bakkt’s collaboration with the ICE’s leading futures exchange and clearing infrastructure to bring physical delivery futures contracts to market participants in 30 countries.

They are now gearing up for the launch date for its Bitcoin (BTC) futures project in 3rdquarter owing to the pending of approval from the New York Department of Financial Services (NYDFS), as per a recent report by The Block.

Several investment veterans and the industry analysts reckon that the launch of Bakkt can act as the bullish driving force for bitcoin prices.

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.

He told to Brave New Coin (BNC) that “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.” 

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. 

The launch is all set to go in Q3, once a 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. Courtesy: BNC