The Intercontinental Exchange (ICE) – founding company of the New York Stock Exchange (NYSE) has finally kicked off its cryptocurrency marketplace called Bakkt, offering institutional investors Bitcoin futures contract.
Futures contracts are legal agreements to buy or sell a given commodity at a specific price at a specific time in the future. Trading bitcoin futures offers traditional financial institutions a safer and more attractive way to invest in digital assets rather than trade them directly. Through the bitcoin futures, investors can bet on a dip in market prices as an approach or hedge.
First, Bakkt is viewed as a big step towards mainstream adoption; traditional financial institutions now have the opportunity to invest more securely in the digital currency industry which will mean an inflow of more money into the market. Also with institutions investing, confidence in the digital asset market will grow and attract more investors.
Bakkt is unique as it is the first Bitcoin futures contract to be ‘physically-settled’ – that is when a futures contract expires, it will be settled with actual Bitcoin. This is in contrast to other contracts such as the CME Group contract which is settled in cash; with traders never actually dealing with the digital currency.
Bakkt is developed as “an integrated platform that enables consumers and institutions globally to buy, sell, store and spend digital assets under a regulated and transparent platform.
Bakkt aims to make mainstream institutions less sceptical about digital assets; allowing them to buy, sell, store and spend digital currencies.
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At the time of this publication, statistics show that a total of 71 Bitcoin futures have been traded over the past 24 hours at $9,875 per Bitcoin.
While this is only a start, analysts say the rather slow reception at the Bakkt launch could be attributed to Bitcoin’s stagnant prices around the $10,000 region over the weeks; hence institutional traders are in no hurry to initiate positions. Bitcoin is currently trading around the $9700 price mark.
Despite this slow pace with price movement, Bitcoin analysts remain bullish on the impact of Bakkt on the digital asset. Most say it will improve trust, give Bitcoin and cryptocurrencies a better reputation, and pitch BTC as a choice asset in every institutional investor’s portfolio.