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Bakkt breaks another record, but not all is well for them

Photo of: Nathan VDH
by Nathan VDH

Bitcoin Futures (BTC) is one of the most popular offerings from exchanges and cryptocurrencies investment companies. Bakkt has just set a record in this area, improving the previous one by 36%. The company reported trading more than $200 million of its 15,955 Bitcoin futures contracts on September 15. This improvement reflects the growing interest of investors in the company, which was going through some tough times. However, behind these flattering figures for Bakkt lies another reality that is not necessarily as beautiful. Explanations.

With these 200 million dollars negotiated, Bakkt can be pleased to have convinced a part of the institutional investors with the exposure to Bitcoin proposed by its offer. Indeed, at the maturity of the futures contracts offered to them, the company’s investors receive a deposit of Bitcoin instead of US dollars. However, Bakkt pales in comparison to most crypto exchanges that offer a similar futures product. Indeed, the daily volume of Bitcoin futures contracts on Binance and OKEx on the same day was over $2.3 billion and $2.1 billion respectively.

In comparison, Bakkt’s balance sheet is 10 times smaller than that of the two exchanges, which were at regular statistics. The company’s lag seems even greater when looking at the Open Interest (OI) figures. This is the number of outstanding commitments on futures and options traded on an exchange at any given time. At $881 million on OKEx and $803 million on BitMEX, the open interest on Bakkt was only $13 million.

Since its launch in September 2019, Bakkt still cannot boast of a substantial measuring system or use. However, physically-settled Bitcoin futures contracts remain the exchange’s main selling point. Despite the record that has just been set, it is significant to note that only 63% of the contracts would have settled in Bitcoin. One more slap in the face for the company, whose year 2020 will not necessarily have been a glorious one. Considering its small market share, it would be hasty to consider Bakkt as a significant player in the field of bitcoin futures contracts.

In the wake of this record, which is significant on a market scale, Bakkt should pursue its ambition to plunge Bitcoin into the deep end of institutional investors. The company will also be able to rely on its various offers designed to democratize the use of cryptocurrencies for individuals and companies.