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after two delays and 13 months of questions, the intercontinental exchange-backed bitcoin warehouse and futures contract facilitator is launching monday, opening the door for institutional investors to take positions on the cryptocurrency in a federally regulated venue.
trading is set to open at midnight utc and close at 22:00. for the first time, interested observers will be able to see just how much pent-up demand there is among big-money traders for this hotly anticipated service. bakkt’s data feed will be freely available through june of next year, after which it will require a subscription, according to a company faq.
as often noted, bakkt’s futures will be physically settled, meaning buyers receive bitcoin at expiration, whereas the futures available since 2017 at the chicago exchange cme group are cash-settled – essentially side bets on the cryptocurrency’s price.
but what may be most unique about ice’s bitcoin futures contracts is that they expire after a day. according to the daily contract’s specifications, the bitcoin will be delivered on the second business day after the contract’s date.
for most commodities – frozen concentrated orange juice, cocoa, what have you – the underlying asset is typically not delivered for at least 30 days (although ice also offers one-day contracts for silver and gold). while bakkt is also offering a 30-day bitcoin futures contract, the one-day version will essentially allow institutions to buy or sell bitcoin in a way that’s more familiar to them than the helter-skelter world of crypto exchanges.
bakkt anticipates significant institutional demand for its futures contract, though it remains to be seen how significant it actually is. “we could see decent trading volumes for the product,” said john todaro, director of research at tradeblock. “as the digital currency space continues to mature we should see an increase in volumes for these products relative to spot over time,” he said.