Bakkt, the market’s first physically-settled Bitcoin futures offering, has posted the largest single-day trade volume on its monthly contract and is now an order of magnitude away from the volumes of its cash-settled competitor at CME Group.
Volumes hit ~$37.45 million on Wednesday, passing its previous high of ~$19.96 million on November 22. The total volume of Bakkt’s monthly bitcoin futures now stands at $269.64 million (33,036BTC) since the market launched on Sept. 23. The average volume has been ~$5.62 million (688.25 BTC) a day over the last 48 trading days.
The Intercontinental Exchange-backed venture is also looking to roll-out an options market tied to bitcoin in December. It announced that with 4,443 BTC contracts traded, Wednesday was its biggest day yet, posting a 60 percent increase in trade volume from Friday, the contract’s previous all-time-high in terms of the number of contracts traded in a single day.
Bakkt Trust Company LLC, a subsidiary of Bakkt Holdings, LLC, is licensed by the State of New York to provide custody of bitcoin and is a qualified custodian under applicable laws. Registered with the Financial Crimes Enforcement Network (“FinCEN”), Bakkt Trust Company complies with FinCEN’s applicable regulations and guidance.
The recent eruption of volume and open interest in both the Bakkt and CME futures contracts — seen alongside a sharp recovery in the price — is strongly bullish for Bitcoin in the short-term, representing an influx of new long contracts being opened
Bakkt’s Upward Trend Against CME
The news is a remarkable U-turn given the platform’s lackluster volumes at launch two months ago—Bakkt’s first day saw just 72 BTC contracts change hands, 75 times less volume than that of CME’s debut day in December 2017.
If Bakkt can keep up its current momentum and average 4,000 contracts per day, the platform will be trading roughly 16 percent of CME’s average daily volume in November (CME’s November average of 4,768 contracts puts its daily average at 23,840 BTC, with each CME contract representing 5 BTC).
December will be a crucial month to gauge whether institutional bulls intend on using Bakkt to hold contracts past expiry to gain exposure to “physical” BTC, or whether they are more interested in capitalizing on short-term fluctuations in price.
Traders that are currently in long positions may opt to profit on short-term hikes in price and sell before contract expiry, the point at which they would take possession of “physical” BTC.
Recently, CME Group, a derivatives exchange giant was the only provider of cash-settled bitcoin futures contracts. Bakkt’s plan seems to not only beat rival CME on the cash-settled product, but also bitcoin options contracts.
Interestingly, CME has been preparing to launch an options product tied to its bitcoin futures on Jan. 13, while Bakkt is planning to launch its options contracts on Dec. 9.
Bakkt’s first contract was initiated at a price of US$ 10,115. It was assumed that shortly after its launch in September, the price of Bitcoin dropped below the US$10K mark.