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Cryptocurrency Derivatives Series: Spotlight on Bakkt’s Futures, VanEck-SolidX ETFs

The new cryptocurrency start-up, ‘Bakkt’ established by the Intercontinental Exchange (ICE), was all set to launch bitcoin futures contracts with physically delivery facilities. 

Well, the objective is to offer new tracks especially for institutional clients and retail traders to make an access for cryptocurrency trading. 

The cryptocurrency-avenue awaits the launch of ICE’s Bakkt (physically settled-BTC futures) after obtaining the CFTC’s green. While Bakkt has now given new hints of release day, in an announcement on Medium blog-spot.

The week’s crypto news cycle was defined by the soft-launch of two new investment products. On September 3rd, the VanEck-SolidX consortium announced that it will soon launch an ETF-like Bitcoin product for large US investors. The product falls under 144A of the 1933 securities act, and through this ‘loophole’ the group will be able to issue shares in the VanEck-SolidX Bitcoin Trust to institutional investors. The same consortium has been unsuccessfully seeking approval from the SEC to launch a Bitcoin ETF, and this appears to be a stop-gap solution while the SEC drags its heels.

BNY Mellon will act as the trust’s daily fund accountant, administrator and transfer agent, complimenting a syndicate of underwriters that have provided 125 million US dollars of insurance. The shares began trading on the 5thof September quoted on OTC Link ATS, an SEC-regulated alternative trading system. The launch does not fulfill VanEck-SolidX’s larger vision of creating a Bitcoin ETF accessible by retail investors, however, it does open the door for more institutional investors in the United States to add BTC exposure to their portfolios.

On September 6th, the Bakkt Warehouse solution launched as expected. ‘Warehouse’ is Bakkt’s secure, credited Bitcoin custody solution. Bakkt can now accept Bitcoin deposits and withdrawals before the official trading of its Bitcoin futures monthly and daily contracts begins on September 23rd.   

A tweet announcement from Bakkt on Friday appeared to coincide with a sharp $700 BTC price drop. Some analysts suggested a ‘buy the rumor, sell the news’ scenario. It’s possible that the confirmation of Bakkt’s release dates may mark the end of a period where large traders were able to front-run the news. 

Regardless, this week marked the first tangible releases from the most anticipated mainstream investment vehicles, Bakkt, and the VanEck-SolidX ETF.

However, both releases are smaller pieces of a larger jigsaw that is still being pieced together. The ETF is not yet available to retail traders, and Bakkt launched a secure custody platform where Bitcoin can be deposited and withdrawn, but not yet traded. 

Although the market reaction was positive, more robust and widely accessible mainstream products are needed to create the bullish sentiment necessary to push the markets toward new all-time highs. Courtesy: BNC

By Niranjan Patil
  • Market Data
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