It’s been about two months since the Bakkt cryptocurrency exchange was announced by the Intercontinental Exchange (ICE), along with the groundbreaking announcement that it would offer the first officially licensed and regulated physical Bitcoin futures in the United States.
Bakkt has re-affirmed that these physical Bitcoin futures are on the way as of 25 September 2018, and everything appears on track for them to launch in November 2018, little over a month from now. The exchange is saying that physical Bitcoin futures will be available in GBP and EUR in addition to USD.
Our first contracts will be physically delivered Bitcoin futures contracts versus fiat currencies, including USD, GBP and EUR. For example, buying one USD/BTC futures contract will result in daily delivery of one Bitcoin into the customer’s account.
— Bakkt (@Bakkt) September 25, 2018
Currently, the only Bitcoin futures available are cash-backed and cash-settled futures on the Chicago Mercantile Exchange (CME) and the Chicago Board Options Exchange (CBOE). Since these Bitcoin futures in Chicago are entirely backed by cash and settled for cash they can be considered paper Bitcoins. Investors purchasing paper Bitcoins in Chicago do not increase spot market demand and in fact, divert money away from Bitcoin spot markets long term.
Additionally, shorting Bitcoin futures in Chicago probably leads to market manipulation that causes Bitcoin’s price to go down, particularly around the time monthly futures contracts expire. It appears traders could be manipulating Bitcoin spot markets to crash to increase short sale profits from future contracts.
The Bitcoin futures that will probably be launched by Bakkt in November 2018 will be the first physical Bitcoin futures. They will be settled for actual Bitcoins on a daily basis, meaning an investor who buys Bitcoin future contracts on Bakkt will directly receive Bitcoins into their accounts on the same day when contracts settle. This means that physical Bitcoin futures contracts on Bakkt will directly increase spot demand for Bitcoin and, therefore, increase global Bitcoin price.
Effectively, the physical Bitcoin futures contracts on Bakkt will allow traders and investors to buy Bitcoin in a safe and regulated way, ideal for institutional investors. It is likely that the physical Bitcoin futures contracts on Bakkt will be available on all major stock trading platforms as well, which could pave the way for a major Bitcoin rally.
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