The Bakkt saga has been the story to follow for well over a year now in the cryptocurrency community – so it is almost unbelievable to realize that it literally only launched yesterday. We are taking a look at the much anticipated bitcoin futures exchange and its potential impact not only the futures market, but on mainstream bitcoin acceptance and institutional trust as well. And while we’re here, we will also evaluate the first day of the exchange. Buckle up for that as the shiny success story of Bakkt still seems to be just a little out of reach.
What is Bakkt and why is everyone so hyped about it?
As the new Bakkt website says on its page, Bakkt is “the first end-to-end regulated digital asset ecosystem for institutions”. It offers services to merchants and retail consumers as well but, as we will soon see, the real target is the wide range of financial institutions who has, so far, shied away from dipping their toes into the wonderful world of cryptos and bitcoin.
The futures exchange was originally announced back in 2018 and the idea has been deemed very impressive from the very first article that hit the crypto world: with the Intercontinental Exchange’s backing (that, among other, owns the New York Stock Exchange) and major supporters like Microsoft, Starbucks and the Boston Consulting Group, Bakkt’s story has been built up as the Messiah of the bitcoin world.
After the announcement, a launch in the near future was expected – but Bakkt’s story is far from being that simple. The launch was announced, then postponed, then announced, than postponed again… at least 3 or 4 times for good measure. Seeing news articles pop up with the titles ‘Bakkt launch postponed due to regulatory issues’ was not surprising at all – it was just a normal day in the office.
But even though the launch date was changing quicker than the price of bitcoin, the crypto users remained excited: the only question is – but why?
Okay, a bitcoin futures exchange market does sound like a nice opportunity – but still, why are people so excited about it? Isn’t it just another exchange?
Why Bakkt could be really good for the whole crypto sector
Well, not exactly: as a futures contract is basically an agreement to sell or buy an asset in the future at an agreed upon price, it give bitcoin investors the opportunity to shield themselves from the very real risk that has always been associated with bitcoin trading (and honestly been either the big bad wolf or the saving grace in the crypto world): the unpredictable volatility of the market.
And that brings us to the two main reasons why so many experts and crypto enthusiast are excited about this new futures market.
Firstly, having a completely regulated digital asset market like Bakkt almost guarantees that more financial institutions will be willing to get into the crypto sector – after all, if it is federally regulated it can’t be that dangerous, right?
And financial institutions mean one main thing for bitcoin (and consequently other cryptocurrencies): a lot of incoming money. This financial benefit especially excites people in a time when it seems like everyone is hodling – the fresh new inflow of money could finally push bitcoin into a substantial bull market.
Secondly, the presence of the financial institutions could finally bring much needed legitimacy to bitcoin. Although awareness is spreading and bitcoin has definitely moved from a speculative, technological game to a legitimate and highly-regarded financial tool, it is still not used by a lot of big names in the financial world. The growing institutional demand for Bakkt’s services could quickly change that – and if the biggest names on Wall Street are willing to trust bitcoin that will mean that everyone can.
Although trust in the biggest financial institutions and banks are not complete and has been especially fragile at times since the crisis of 2008, it is still safe to say that if the major banks are willing to go for bitcoin, the clients of those bank will promptly follow – making mainstream bitcoin acceptance something that is not a simple dream, but a likely possibility.
So what does Bakkt exactly offer?
The two main contract types are the dailies that expire in just 1 day and the monthly contracts whose expiration dates are higher risk with a 30-day period.
And while a daily future contract might not seem like such a revolutionary idea, it could actually be the perfect introductory service for major financial institutions who are way more familiar with a cash-like trading experience.
The first day of Bakkt: not the success story we expected
After postponing the launch of the new futures exchange, the very first of its kind, Bakkt finally launched yesterday – and boy, did it disappoint.
Although we are still far from pronouncing it as a failure, but the first look at the so highly anticipated exchange is gloomier than we expected. Maybe it’s only because the price of bitcoin started crashing just as Bakkt launched but the estimated huge institutional demand seems to be everything but huge. According to Cointelegraph, within the first 24 hours Bakkt only managed to trade 71 BTCs which, considering how high expectations were, is not even close to being a good launch.
But we should not be so quick to rush to the wrong conclusions: Bakkt has a lot of potential and even though the first day could have been better, experts are still praising Bakkt – mostly because of its impact on bitcoin acceptance
Anthony Pompliano, crypto investor, had this to say about Bakkt in general:
“The more infrastructure that’s built around this, the more likely it is to never go away […] we’re at a tipping point now where Bitcoin is here to stay. It’s going to end up being in every institutional investor’s portfolio.”
Whatever will happen to Bakkt in the next couple months, it will most certainly have an impact on bitcoin and how people and financial institutions are looking at cryptocurrencies in general. So with all the love in our hearts, we can only say one thing: the crypto world is rooting for you, Bakkt.