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Cryptocurrency Derivatives Series: A Quick Heads-up on Bakkt's BTC Futures Launch

The launch of Bakkt’s physically deliverable Bitcoin futures trading platform is just a week away. Eager bulls may look for positive price action around the event, though it is likely this has been priced in. Bakkt has recently opened warehouse for customers’ bitcoin deposits and withdrawals before its launch on 23rdof this month, and it is likely to contribute significant bullish momentum over the longer term as a key institutional onramp into Bitcoin and due to eye-catching partnerships with corporate entities such as Microsoft and Starbucks.

Two futures contracts would be listed

1) A daily settlement bitcoin future, which will enable customers to transact in a same-day market. 

2) a monthly bitcoin futures contract will enable trading in the front month and across the forward pricing curve.

The futures contracts will be margined by ICE Clear US, including the collection of initial margin collateral and variation margin to manage risk. This approach is consistent with capital-efficient risk management practices in global futures markets, ranging from oil and gold to interest rates and equity index futures.

For price discovery, the need for beta-testing before launch is also done by bitcoin. In the recent past, Bakkt has assiduously succeeded user acceptance testing for its bitcoin futures listed and traded at ICE Futures U.S. and cleared at ICE Clear US.

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. The participants will have to encompass applicable AML/KYC reviews, consistent with CFTC-regulated markets and connect via ICE’s existing infrastructure.

Hereafter, quite a few analysts reckoned that the crypto-assets are most likely to gain traction in terms of valuation. 

By Niranjan Patil
  • Market Data
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