Previously highly-vocal CEO Kelly Loeffler hasn’t been as quick to tweet over the dismally low lack of interest from institutional investors or the trading of its physically-delivered Bitcoin futures contracts in the single digits. However, could that all be about to change?
Bakkt hits a new trading record
This week’s market crash hasn’t been bad for everyone. As Bitcoin plunged to a five-month low, Bakkt hit a record high. 590 contracts of Bakkt Bitcoin monthly futures changed hands on Wednesday, October 23 – up 77% from Monday.
Undeterred by its lacklustre start, in a blog post yesterday, Loeffler insisted that since its launch, Bakkt has made tremendous progress. Most notably, working to “build liquidity, create market transparency and build open interest”.
According to the Bakkt CEO, the company now has “tight bid/ask spreads” throughout US, European, and Asian trading hours. She also said that the company continued to onboard both retail and institutional customers.
Bakkt to launch the first regulated options contract for Bitcoin futures
Being an industry-first player seems to be a position that Bakkt feels comfortable occupying. In the same post, Loeffler announced that Bakkt would be launching the first regulated options contract for Bitcoin futures from December 9.
He said: “We’re committed to bringing trust and utility to digital assets and the options contract is an example of the many products we’re developing for regulated markets.”
The Bakkt Bitcoin options contract will be based on its flagship monthly Bitcoin futures contract. It is intended to start building out the exchange’s product offering and develop the asset class further for institutional investors. The new contract is designed to give investors the change to hedge or gain Bitcoin exposure and generate further income opportunities. The contract is self-certified with the CFTC through ICE Futures US.
Key features of the Bakkt BTC options contract
Among the key features of the new contract are capital efficiency through margined contracts and the ability to cross-margin with the underlying futures contract. It also has attractive fees at $1.25 per options contract and gives traders access to analytics and instant messaging with other participants through ICE chat.
Unlike its physically-settled futures contracts, however, Bakkt’s options will allow traders to settle either physically or in cash, which may raise a few eyebrows.
After all, Bakkt’s underwhelming launch was disappointing at best – directly responsible for the Bitcoin price decline, at worst. However, the key to it being bullish for Bitcoin all along was the fact that its futures contracts were physically delivered, meaning that investors must either produce actual BTC or take delivery in them. This, in theory, would see a surge in demand for Bitcoin and subsequent leap in price.
But with the ability to settle in cash on Bakkt’s options contract, will that take further wind out of Bitcoin’s sails? Bakkt’s options could be key to Bakkt’s growth success, but cash settlement isn’t going to excite the Bitcoin community.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.