BY CNA team - October 23, 2018
Bakkt’s bitcoin futures to be offered from Dec 12
The cryptocurrency markets are set to see more institutional fund involvement from mid-December with the listing of the Bakkt bitcoin/US dollar daily futures contract.
ICE Futures US, the futures platform of the Intercontinental Exchange, will list the new Bakkt bitcoin/US dollar daily futures contract for trading on Dec 12, 2018.
“Each futures contract calls for delivery of one bitcoin held in the Bakkt digital asset warehouse, and will trade in US dollar terms. One daily contract will be listed for trading each exchange business day,” ICE Futures says in a notice dated Oct 22.
The daily futures contracts are physically-settled, which means that investors will have to fully pay for their bitcoins that get delivered to them on a daily basis. The contracts will be cleared by ICE Clear US.
Crypto market observers believe that the lure of physically settled bitcoins that is delivered to a secure insured warehouse under Bakkt, will attract more institutional investors who have stayed away because of the issue of custody.
Bakkt is the Intercontinental Exchange’s digital asset subsidiary spearheading the push into the crypto markets. The Intercontinental Exchange also owns the New York Stock Exchange.
Price discovery, which has been an issue in the crypto markets due to most exchanges allowing for margin-trading, leverage or cash settlement, will also be easier with physically delivered bitcoins because there is transparency in the number of bitcoins being traded.
Investors expect market sentiment to improve once the futures are offered, versus the staid market conditions now where trading has been range-bound.
They had pinned their hopes on the US Securities and Exchange Commission approving the rule change allowing for bitcoin-based exchange traded funds (ETFs) that could give a boost to the markets but that looks like happening only next year.
CME and Cboe both offer cash-settled bitcoin futures where there is no actual delivery of the bitcoins but transactions are settled in cash after the contracts expire or are exercised.