Bakkt to Launch Its Bitcoin Futures Trading & Custody Service in a Few Weeks
Highly-anticipated, Intercontinental Exchange-backed crypto venture Bakkt announced that it will launch its bitcoin futures trading and custody service in the coming weeks.
Bakkt’s physically-delivered bitcoin futures are considered a game-changer for bitcoin because unlike cash-settled bitcoin futures (which already trade on CME), institutional investors would end up holding physical bitcoin in their portfolios upon delivery, which would mean “real” bitcoin adoption by Wall Street.
On August 16, Bakkt announced that it will go live with physically-settled bitcoin futures contracts and a crypto custody service, called Bakkt Warehouse, on September 23 to enable investors to trade and store bitcoin in a regulatory-compliant manner.
The announcement caused a jump in the price of bitcoin (BTC), which came as no surprise given the potential impact that physically-delivered bitcoin futures may have on bitcoin going forward.
Unlike cash-settled bitcoin futures contracts, physically-settled bitcoin futures contracts will deliver bitcoin upon maturity. As a result, institutional investors who are betting on the price development of bitcoin will end up holding actual bitcoin and not just the difference of their buy and sell price in cash (as is the case with CME bitcoin futures).
While many investors will likely close out their positions before maturity to avoid physical delivery, there will also be institutional investors who will be brave enough to hold the coins.
As a result, we could witness a higher rate of institutional investor bitcoin adoption, which, in turn, could potentially lead to a new rally in the price of bitcoin.