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Bakkt $BTC Daily Futures Will Be Backed By Bitcoin.

The parent company of the New York Stock Exchange (NYSE), Intercontinental Exchange (ICE), will begin trading 1-day Bitcoin (BTC) futures on its crypto trading platform Bakkt pending CFTC approval.  Source: ICE press release on Monday October 22, 2018.

ICE Futures U.S., Inc. will list the new Bakkt Bitcoin (USD) Daily Futures Contract for trading on Wednesday, December 12, 20181 . The Bakkt Bitcoin (USD) Daily Futures Contract is a physically-settled daily futures contract for bitcoin held in Bakkt LLC, ICE’s Digital Asset Warehouse, and will be cleared by ICE Clear US, Inc. Each futures contract calls for delivery of one bitcoin held in the Bakkt Digital Asset Warehouse, and will trade in U.S. dollar terms. One daily contract will be listed for trading each Exchange Business Day

Bakkt will not allow any margin trading on its platform.  According to Bakkt’s CEO Kelly Loeffler, physical delivery is a critical element to providing accurate, transparent price discovery.  Pre-funded trading let’s buyers know that they are paying a fair price rather than the inflated prices seen on other exchanges where margin trading is allowed.

Potential Impact on Bitcoin ETF

Joseph Young posited the idea that the 1-day Bakkt futures could influence the SEC to approve a bitcoin ETF. This begins to make sense when we remember WHY the SEC rejected those bitcoin ETFs.

The SEC has rejected multiple Bitcoin-backed ETFs, most notably due to the lack of liquidity, which the SEC referred to as “markets that lack sufficient size.”.

So we would expect the Bakkt futures to add the liquidity the SEC had previously expressed concern over.  Bitcoin ETF proposal may be closer to seeing regulatory approval than many think.  We expect the SEC’s perspective on this market to shift.

 

SEC Announced Review of Previously Denied ETFs

The $BTC market may have moved up about $150 on news that the SEC was reviewing 9 previous bitcoin ETF denials.

 

As an Aside: Here’s Likely Why They Decided To Do a 1-day bitcoin futures contracts:


Source: Crypto Globe.