Bakkt, the highly anticipated Bitcoin futures contract, recorded just $5 million USD in total trading during its first week.
The long-awaited Bitcoin futures platform from The Intercontinental Exchange (ICE) launched last week to considerably underwhelming fanfare given the hype surrounding the project since it was initially announced last year. According to ICE, which is also the parent company of the New York Stock Exchange, just 623 Bitcoin futures contracts were traded during the first week of Bakkt. Each of Bakkt’s futures contracts represents one Bitcoin, so just over $5 million was traded based on Bitcoin’s current value of $8,325 USD.
Compare this with the Chicago-based CME launch in 2017, the biggest rival to Bakkt, which traded over 4,000 Bitcoin futures on September 27 alone. This represents a trading volume of $165 million with CME contracts worth five Bitcoins. Bakkt’s daily futures contracts fared even worse than the monthly one, with fewer than six being traded during the first week.
Bakkt was touted as a gateway for institutional investors to get into Bitcoin, with many analysts believing it would help build trust towards crypto trading among legacy financial institutions. While it is still early days, it hasn’t exactly panned out as analysts expected. Guy Hirsch, managing director of eToro, has urged for patience with Bakkt:
“I see the hesitance as a ‘wait-and-see’ approach more than a reaction to the structure of the offering. Crypto is still a relatively new asset class and institutions are still learning about the benefits that it offers. These sorts of offerings can often take a long time to play out and gain market share. Expect institutions to cautiously watch each other and ensure that the market infrastructure is in place before making any commitments.”
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Perhaps one reason for the lack of trading volume on Bakkt is Bitcoin’s stuttering price over the last week. Bitcoin’s price tanked more than 20% from $10,026 to below $8,000 in the first seven days of Bakkt’s launch. However, some analysts have argued that the declining price is a direct consequence of Bakkt, with JP Morgan saying, “It may be that the listing of physically settled futures contracts has contributed to recent price declines, rather than the low initial volumes.”
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