Bakkt, a subsidiary of ICE(Intercontinental Exchange), has got a clearance to launch the much awaited Futures Trading on 23rd September, 2019. As we write, Bakkt has already started User Acceptance Testing to release the vision in September.
In a Medium post, CEO Kelly Loeffler, quoted “Clear to Launch”, stating that their much awaited and highly anticipated Bakkt physically settled Bitcoin (BTC) futures product will now be a reality.
Bakkt was trying to get the regulatory green-light from the U.S. Commodity Futures Trading Commission (CFTC) to authorise its exchange since last year. After several discussions with crypto customers and regulators regarding security, management features, the new bitcoin futures contracts have been shaped.
Why Was Bakkt’s Futures Trade Anticipated?
Till date, Bitcoin Futures Trade was cash settled. Bakkts’ Futures Trade will deal with Physically settled futures in >30 countries. What is great about physically settled futures, you may ask. With these, more bitcoins will emerge in the existing framework. The crypto market is excited about this launch.
Participants, in order to avail physically settled futures, have to undergo applicable AML/KYC reviews, consistent with CFTC-regulated markets and connect via ICE’s existing infrastructure.
Types of Futures –
There are two types of Futures to be traded –
- Daily Future – This will enable Future Trading on a daily basis.
- Monthly Future – This enables Future Trading in the front month and along the pricing curve.
Block minimum contract for these Futures trade is 10 contracts. You can trade more than 10 contracts.
For a clear understanding of the futures. Refer the image –
How Are The Futures Contracts Margined?
ICUS initial margin for the Bakkt Bitcoin Daily and Monthly Futures is expected to be approximately 37% for outright contracts. Margin for spreads are expected to range between $400 and $800 per spread position depending on the difference between the two expiration dates. As with all contracts, the ICUS risk department reserves the right to adjust the margin level based on market conditions.
Bitcoin Price Surge –
After this positive news, Bitcoin prices spiked nearly 4% from roughly $9,000 to highs of $10,400. Bitcoin prices increased over $300 in a matter of minutes. Only one day after dropping to $9,400, Bitcoin is now trading around $10,400.
Bitcoin Market had seen a downfall from July end trading at $9,380 (the lowest). This trend showed how volatile Bitcoin asset is. With this news, Crypto analysts are excited and hopeful about the rising prices.