After a year-long wait, Bakkt recently announced that it was cleared for launch as it received a thumbs up from the CTFC. The Bakkt Warehouse custody went live on 6 September and revealed that it was accepting Bitcoin deposits and withdrawals until the Bakkt daily and monthly futures contracts was launched. Three days later, on 9 September, the cryptocurrency exchange announced that the warehouse was active for futures with a $125 million insurance policy for the Bitcoin deposited in its warehouse.
Crypto analyst Plan B was recently on a podcast with Preston Pysh in his “The Investor’s Podcast.” Plan B gave insight into how derivative providers like Bakkt can impact the ecosystem. According to Plan B, the derivatives market is very important due to its network effect on Bitcoin. It opens the market and makes it more attractive for investors who are always on a lookout to sell their investment. Institutional investors look for markets to sell at a normal price and the futures market addresses their requirement as an investor can sell as well as close their position, he added.
He later went on to compare Bakkt with Chicago Mercantile Exchange [CME] as it is a cash-settled futures exchange. CME could be unfavorable as it depends on fiat money which gives the government access to the printing process of the required fiat. However, Bakkt’s entry is very important as it allowed selling of Bitcoins in the future with Bitcoins and not fiat money. Plan B said,
“And that changes the whole game because first, it can be arbitrage between CME and Bakkt. Between Chicago and New York. If the price is very different, you just buy and sell at the same time. In the future against different prices, it will be like free money. So that will be arbitraged away very soon.”