On September 21st, Bakkt has announced the launch of their long-anticipated Bitcoin [BTC] futures. Ten days since, we are here to recapitulate the short-term impact these derivatives had on the industry and the market.
What are Bakkt Bitcoin Futures?
Like any other cryptocurrency derivatives, when trading futures, traders “bet” on the future price of the cryptocurrency. Therefore, contracts they are signing are valued in accordance with the underlying asset, in this case, Bitcoin. Therefore, a trader doesn’t actually buy and sell Bitcoin, but the contract tied and dependant on the value of Bitcoin.
Traders from around the world could trade BTC futures on other platforms long before Bakkt was given the permission to launch their own version. So, why is this such a big deal?
Why is Bakkt Important?
One of the giants of the industry, Intercontinental Exchange (ICE), operates Bakkt exchange. In case someone doesn’t know, ICE is also the owner of the New York Stock Exchange. Since the institution holds an astronomical reputation, it has managed to get the financial backing from some of the most prominent players like Pantera Capital, Fortress Investment Group, Eagle Seven, Galaxy Digital, Protocol Ventures, Susquehanna International Group, and Horizons Ventures.
Needless to say, the company is based in the US and is highly regulated by US laws. That increases the level of trust that potential investors have towards trading any asset or product they are offering.
As such, ICE has managed to raise the interest of the crypto community. The majority of enthusiasts recognized Bakkt BTC futures as the driving force that will help push Bitcoin towards the new ATH.
The Results of Bakkt BTC Futures to Date
It has been a week since Bitcoin futures trading has been live on Bakkt and we cannot deny the facts:
- Bitcoin tanked by 22%
- Bakkt BTC futures have a low volume ($5 million)
The price of Bitcoin did have a triangle pattern before the launch. It was approaching the tip of the pattern just as the launch approached. However, once the long-anticipated trading product was live, the price movement broke out southwards. It is difficult to categorize this decline as the result of the Bakkt launch or high volatility of the asset. Still, the coincidence is undeniable.
Many BTC maximalists flirted with the idea that, once the legal security of the US legal system will overlook the BTC futures trading provided by such a giant, traders will surely swarm the platform in search of safety nobody managed to provide yet.
Obviously, that didn’t happen.
Instead, the price of Bitcoin fell towards the levels we haven’t seen since early June when investors would give everything to see BTC at $10,000 again. Moreover, the current situation has seriously shaken the already weak trust towards cryptocurrencies. As a result, the majority of the top 100 coins tanked.
What to Expect in the Future?
When it comes to what we can expect from Bakkt BTC futures in the future, the expectations vary. Nevertheless, it is now obvious that expectations may not be as realistic as people would like.
Dave Weisberger, CEO of CoinRoutes, gave an interview given to a well-known cryptocurrency news outlet. He stated: “These things tend to develop slowly.” Looking at the rate of cryptocurrency adoption, this industry veteran may be more right than we are prepared to accept.
It took Bitcoin and the complete cryptocurrency market eight years to break into what we may enthusiastically call mainstream and get the attention of the wider audience. Expecting a single trading platform to change the fortunes in such a short period turned out to be unrealistic. In fact, what the short history of cryptocurrencies and the blockchain technology has shown us is that there is more market impact coming from the technology development corner than from trading platforms launching products or listing coins.
At last, Bitcoin futures are in play long before Bakkt’s licensing with little to no impact on the price of Bitcoin. The consequences of depending on speculators to bring us a wider adoption of cryptocurrencies instead of looking towards the development could be grave.
There is a chain of reactions that we always have to have in mind when we think about Bitcoin. The development brings in investments, not vice versa. Therefore, it is wrong to look for saviors on the wrong end of the line. If cryptocurrency developers fail, so shall exchanges and trading platforms along with people who use them, regardless of the starting potential.