The highly anticipated Intercontinental Exchange’s bitcoin futures contract could only make $5 million of total trading – and traded fewer than five contracts across its first week was its daily product.
Anyway, some 623 monthly bitcoin futures contracts actually changed hands last week, this is according to the exchange’s Bakkt division, set up last year as a new marketplace for digital assets by the Atlanta-based company.
First launched on Sept. 23, both the monthly and daily contracts.
Based on the current price of $8,322 each one of Bakkt’s futures contracts represents one bitcoin, so the total trading volume was just over $5 million.
Some 4,099 bitcoin futures contracts traded on Friday alone at rival Chicago-based exchange operator CME, whose market opened in 2017. On the single day, CME’s futures contracts represent five bitcoins, for a trading volume of $165 million
Presently with fewer than five contracts trading throughout the first week. Bakkt’s daily futures contracts went in even more poorly.
However, the Executives at Bakkt had said the new contract as a milestone for the cryptocurrency industry, as it will go a long way to see to need of big institutional investors who has far been slow to buy bitcoin and other digital assets.
According to the exchange, we are looking forward to making a new offering to appeal to institutional investors like hedge funds and other money managers because bitcoin must be delivered to fulfill the contract’s terms when the maturity date arrives.
Touted as a key advantage for asset owners who want to hedge their portfolios in contrast with the CME’s contract, which is settled via cash payments but has also become popular with individual investors.
Now bitcoin investors currently in the market already have plenty of places to buy and sell, but it’s too early though to write off Bakkt’s new push, according to David Weisberger, CEO of CoinRoutes, a New York-based company that helps investors route cryptocurrency trades to various exchanges.
Basically, unless it is out of cost reason or a liquidity reason,” It takes time for people to move from one place to another, stated Weisberger, a veteran of Wall Street firms Citigroup in a telephone interview, with Morgan Stanley. They also added that: “These things tend to develop slowly.”
Damon Leavell, a spokesman for Intercontinental Exchange, said in an email that there was “during the first week of the new bitcoin contract, there was an indication of strong industry participation”
Meanwhile the contract which will mature in October, had the “tightest bid-offer spreads in the market, which was an exciting achievement.” According to him.
A look into the analysis by Wall Street analysts states that “the gap between what buyers are offering to pay and what sellers are offering to accept – as a gauge of how efficiently a market is operating”.
Credits: Brad KeounJOIN OUR COMMUNITY