The cryptocurrency exchange announced today on Twitter that they would be offering physically delivered bitcoin futures contracts:
Our first contracts will be physically delivered Bitcoin futures contracts versus fiat currencies, including USD, GBP and EUR. For example, buying one USD/BTC futures contract will result in daily delivery of one Bitcoin into the customer’s account.
— Bakkt (@Bakkt) September 25, 2018
What is Bakkt?
Bakkt is a firm that emerged this year as a result of collaboration between the Intercontinental Exchange (who also happened to the owner of the New York Stock Exchange (NYSE), Microsoft, Starbucks, BCG, and others. Their goal is to build an open, seamless global network to enable investors, merchants and consumers to buy, sell, store and spend digital assets in a simple, more efficient and secure manner.
“Bakkt is designed to serve as a scalable on-ramp for institutional, merchant and consumer participation in digital assets by promoting greater efficiency, security, and utility,” says Kelly Loeffler, CEO of Bakkt.
Unlike most cryptocurrency exchange, Bakkt offers custody services for large institutional investors. Their US regulated custody services might be the missing link needed for the SEC to finally approve a Bitcoin ETF.
Bakkt is scheduled to launch in November of this year, which for many analysts signals the start of a possible uptrend for Bitcoin and the crypto markets as a whole.
What does this announcement mean for crypto?
A physical Bitcoin futures contract means that a customers Bitcoin is delivered on a specific date, whereas most futures offering are typically settled with cash.
According to Ironwood research group (IRG) analyst Mike Strutten, a physically backed Bitcoin future is a very bullish sign for the markets;
“Since Bitcoin futures come from Bakkt, these are physically backed up, which means that Bitcoin will be bought and taken off the market and stored in the platform for the duration of these contracts. And they make these (contracts) in one-day transactions and do not leverage or trade margin. In my opinion, this information is really bullish for the market, especially if this [platform] comes out.”
Mike also believes that since the futures contract will receive approval from the Commodity Futures Trading Commission (CFTC), it will likely attract capital from thousands of institutional and retail investors.
Overall, Bakkt’s announcement helps bring the institutional investor community one step close to adopting cryptocurrencies, which will very likely lead to a significant increase in demand for BTC from investors who have traditionally stayed out of the crypto space due to regulatory concerns.
Update October 22, 2018: According to recent release, Bakkt future contracts will begin trading on December 12, 2018.