When the rubber hits the road, hype doesn’t make for the greatest fuel, as the Intercontinental Exchange is learning in the unimpressive first week of its Bakkt platform.
Bitcoin futures volumes were barely $5 million for the first week, a pitifully small amount compared to even moderate-sized exchanges of other varieties.
Just a handful of contracts traded over the course of the week. Compare this to CME contracts of a similar stripe, which traded in the neighborhood of $150 million.
Combined, the markets are still pretty insignificant as futures go. Oil futures from a single offering topped $24 million over the past day, by for comparison.
Institutional investors haven’t been the rescue effort that Bakkt and its supporters believed it might be, it’s safe to say, at least not so far.
Will Mainstream Investment Products Be Enough To Capture A Mainstream Audience?
CME Bitcoin futures remain somewhat strong, but it does seem that as the price collapses, investors are less certain how to play the market. The long-long strategy for Bitcoin doesn’t always translate into profits when approaching products such as futures.
Bears have been enjoying themselves the past several days, as massive money exits the Bitcoin market with little obvious impetus.
Bakkt is more than just a futures exchange, however, it is also part of a larger effort at integrating blockchain technology into major corporate business processes (including the likes of Microsoft and Starbucks).
Yet, in order to survive, Bakkt will need to do volumes ten and a hundred times its opening performance.
Futures are not the most popular product in blockchain finance. Trading the token itself is an exciting proposition for most traders, and virtually everything in the market is heavy on risk, light on liquidity. Of all crypto assets, only Bitcoin sports the kind of liquidity that traders are looking for, which explains why it remains the most desired asset in cryptocurrency.
Bakkt and others would like to see an exchange-traded fund – or a product which tracks the performance of the crypto market as a whole – but US regulators have so far given no ground on this issue. With massive manipulation, among other concerns, the crypto markets are viewed to be simply not mature enough to safely bear the burden of ETF.