Wen Bakkt?
TL;DR in three weeks today, crypto will change forever. We’re just not sure how.
Ever since the surprise announcement, 13 months ago, that the Intercontinental Exchange (ICE) was backing an initiative to deliver physical bitcoin futures, the crypto world has been waiting for Bakkt to finally launch. It has been a long and winding road. There have been many delays. Regulatory issues and the need for a secure custody solution pushed back the date by the better part of a year. But now, all the pieces are in place. September 2019 looks like the month when Bakkt will at last open its doors, offering a major conduit for institutional money into the Bitcoin space.
There are at least three reasons why Bakkt is a big deal. One is that it’s backed by such large players, including ICE and Starbucks. The second is that it offers an end-to-end solution for bitcoin trading, enabling major institutions to buy and sell BTC without having to worry about where and how they store their coins, or where they came from (ProTip: Bakkt doesn’t acquire its bitcoins from shady unregulated exchanges). And lastly, these are physically-delivered futures, which means bitcoins are actually bought and sold from the open market. These are not paper contracts: the demand is fed through to the market, so that it will have a real and direct impact on price.
To get to the point, on 23 September Bakkt will launch ‘custody and physically-delivered daily and monthly bitcoin futures contracts in partnership with ICE Futures U.S. and ICE Clear US.’ Rumours are of huge institutional interest and significant capital sat on the sidelines waiting for a way to move into crypto; now they will have it.
Before that, bitcoin deposits will be enabled from Friday. ‘On Sept 6, our Warehouse will begin offering secure storage of customer bitcoin to prepare for the launch of Bakkt Bitcoin Daily & Monthly Futures when they launch on Sept 23’. This will allow customers to deposit bitcoin to the Bakkt platform, in order to make it available for trading on 23 September (and to keep it in safe, regulated storage).
What next?
There’s the obvious question of what happens next. The short answer is, as ever, we don’t know. As we never tire of saying, markets are unpredictable. Moreover, they don’t do what the retail crowd think they will. The 1% of professional investors are very good at fleecing the retail crowd. So when ‘everyone’ thinks that Bakkt will send the price of bitcoin soaring, we are skeptical — at least in the short term. Over time, sustained and increasing demand can only have one impact. But in the run-up to 23 September and in the immediate aftermath? It would not be in the least surprising if we saw heavily volatility.
With the launch of Bakkt, institutions will have a fully regulated way of trading bitcoin in large volumes. Bitcoin will take a step closer to becoming a part of the regular financial markets — and a plaything of those who rule them. That has many implications, good and bad, and we can’t see all of them at this point.
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