The Intercontinental Exchange (ICE), which operates 6 clearinghouses and 12 stock exchanges including the New York Stock Exchange (NYSE), has announced that physical Bitcoin futures will go live on 12 December 2018 on their first crypto exchange, Bakkt. Physical Bitcoin futures could lead to a major rally driven by institutional investments.
The Bitcoin for physical Bitcoin futures will be held in the ICE Digital Asset Warehouse, which is ICE’s new cryptocurrency custodian. After an investor buys physical Bitcoin futures they will be settled the same day at 5 pm Eastern United States time, and delivered into the investor’s account at the Digital Asset Warehouse, after which point the investor can use the Bitcoin as they wish. This essentially provides a way for investors and traders to directly buy Bitcoin in a safe and regulated way, and the physical Bitcoin futures should be available on all stock trading platforms.
There are trillions of USD traded and invested on stock trading platforms, and the physical Bitcoin futures will open up Bitcoin to this immense pool of capital. To put this in perspective, Bitcoin’s market cap is USD 112 billion as of this writing on 23 October 2018, while the NYSE alone has a USD 18.5 trillion market cap, while globally the 60 major stock exchanges in the world have a market cap of USD 69 trillion. If even a small fraction of the money in stocks is diversified into Bitcoin, it could lead to the biggest Bitcoin rally in history.
There are already Bitcoin futures available on the Chicago Mercantile Exchange (CME) and the Chicago Board Options Exchange (CBOE), but the difference is these are cash settled futures and there are no bitcoins backing them. Therefore, money invested into the currently existing cash-settled futures does not increase spot demand for Bitcoin. The physical Bitcoin futures on Bakkt will directly increase spot demand for Bitcoin.
Other details about the Bakkt physical Bitcoin futures include the contract size which will be 1 bitcoin, the contract symbol will simply be BTC, and trading for each daily contract will occur from 8 pm to 6 pm Eastern United States time with a pre-open at 7:55 pm. Therefore, unlike Bitcoin spot exchanges, there will be a couple of hours each day where the market is closed for physical Bitcoin futures. The physical Bitcoin futures will be listed on the ICE Futures U.S. exchange, and the clearinghouse will be ICE Clear U.S.
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