The long-anticipated launch of Bakkt on the 23 September, a bitcoin futures platform, revealed that institutional interest in cryptocurrencies is not that staggering. By the end of Monday, the platform achieved a daily trading volume of a mere 71 Bitcoins.
As the introduction of physically delivered BTC futures showed a lack of interest, many are left to wonder whether Bakkt may even reach a serious point of adoption. However, some factors point out to a more optimistic future. A part of the crypto community believes that the adoption level of Bakkt should be judged a year after it launched, and not on its first day.
As the CME is set to launch its own Bitcoin options at the start of the next year, both platforms may in return complement each other. The regulated derivates marketplace, which was announced a week ago, would provide more tools for hedge trading BTC. Additionally, even a CFTC-regulated Bitcoin Cash Futures platform is set to arrive in the first quarter of 2020.
In an interview with Bitcoin.com, CEO of crypto derivates exchange ‘Deribit’ John Jansen stated that with the launch of Bakkt and the soon-to-arrive CME’s bitcoin options, we are in a phase where the push for demand is a ‘waiting game.’ Referencing to the possible flood of institutional money with the launch of Bakkt, Jansen that the reality of institutional interest is far different. He added that institutional interest at Deribit has been steadily growing, and will gradually increase till March 2020.
While some view that the adoption of the Bakkt platform may be gradual, the imminent ‘failure’ of the launch certainly had a negative effect on the cryptocurrency market. Only a day after the regulated exchange launched, the value of Bitcoin fell by $1,500.
The sudden bearish market sentiment resulted in margin traders who longed to lose all of their assets. On Bitmex, $700 million worth of assets were liquidated in only 24 hours. Binance’s Futures volume for spot trading reached $800 million in trading volume for Bitcoin. Now that the misjudged market brought a great deal of liquidated traders, it seems that the community finally became aware that the state of the derivative market will start to lead market sentiment.
Interestingly enough, the institutional traders who know the potential of cryptocurrencies have already adopted platforms such as Bitmex and Deribit. Now with the launch of a regulated derivatives market such as Bakkt, institutional interest will gradually progress and turn into something that can be regarded as real adoption. For those who thought that Bakkt should have brought a floodgate of institutional money, think again. The new futures platform will initially only legitimize the sector.
As for the state of cryptocurrencies, Bitcoin will have to deal with the lack of interest in the short-term by stabilizing its price and finding a firm support level. For now, there is no event or sudden trigger of mainstream adoption that will drive the price higher. The growth of the cryptocurrency sector will have to stabilize and increase gradually.