Cryptocurrency markets go their own way, we see bull and bear markets. But what matters is that the number of daily transactions for all cryptocurrencies is up year over year
Bakkt is designed
Bakkt is designed to enable consumers and institutions to seamlessly buy, sell, store and spend digital assets. Formed with the purpose of bringing trust, efficiency and commerce to digital assets, Bakkt seeks to develop open technology to connect existing market and merchant infrastructure to the blockchain.
The Intercontinental Exchange earlier this month launched Bakkt, an open, seamless global cryptocurrency platform and network that will allow consumers and institutions to buy, sell, store and spend digital assets simply, safely and efficiently. The ecosystem will also offer physically settled one-day bitcoin futures contracts and bitcoin warehousing.
What Is Bakkt & How Will it Change the Cryptocurrency World?
Attracting institutional investment money seems to be the new holy grail of cryptocurrency, just shy of Mainstream acceptance. There are powers of money floating through the institutional investment sphere, currently tied up in stocks, bonds, and other financial instruments. Bringing that money into cryptocurrency would increase the total market cap of the sphere by orders of magnitude.
Introduction to Bakkt
In August 2018, Bakkt’s parent company Intercontinental Exchange released a statement announcing its intention to use Microsoft’s cloud service Azure to “create an open and regulated, global ecosystem for digital assets.”
This new company, dubbed Bakkt, would start right off the bat with the inclusion of federally regulated markets and auxiliary services, like warehousing. It would even feature Bitcoin to fiat conversions, a feature that is rare on cryptocurrency exchanges and one of the major differentiators between market-movers and also-rans. In total, Bakkt expects to serve a digital marketplace that moves $270 billion per year.
What the Market Is Saying
It’s likely no coincidence that “Bakkt” sounds suspiciously like “backed.” After all, it’s a project of the company that founded the New York Stock Exchange, it’s built on Microsoft technology, it has a slew of big-name institutional investors already on board, and its first major merchant is none other than the ubiquitous Starbucks.
Bringing the ETF factor into crypto
Bakkt’s one-day physically settled Bitcoin futures contracts and physical warehousing will be released or will kick off starting November this year subject to CFTC review and approval. Ideally, the ETF will allow customers to buy BTC one day and expect delivery of the currency the next business day in tangible form. Thus, it could practically lead to increased demand especially because it involves physical delivery of Bitcoin and cryptocurrencies or digital assets.
The two features will help institutional ICE customers to de-risk Bitcoin and cryptocurrencies. They will be able to hedge against and profit from bitcoin’s volatility.
Will it Bring Mainstream Acceptance?
Finally, there’s the real holy grail — Mainstream acceptance. This is often the hardest thing to get. Large financial institutions and technology companies alike burned a lot of their public clout in the years since the Great Recession of 2008. Large banks caused many folks to lose their homes via complicated and opaque financial movements, and technology companies wantonly sold private data for a profit while neglecting to keep their own systems secure.
What Impact Could Bakkt Have?
Tom Lee of Fundstrat believes that the Bakkt launch could be a catalyst that leads Bitcoin price higher for the rest of 2018, and he isn’t the only one. He pointed out that it certainly felt as though Bitcoin had reached a solid bottom, as it has held above the key $6000 level as support.
In Lee’s opinion, Bakkt’s entrance into the market could reverse the downward pressure on Bitcoin price.
Bakkt’s Goals — Is the Platform Good for Bitcoin?
There are three main goals Bakkt want to accomplish. One goal is to move retail payments away from credit cards and onto blockchain applications, making Bitcoin a feasible, respected, and adopted means of payment within the economy. The second goal is to provide the same protections for Bitcoin as other assets like stocks, bonds, or commodities that would generally trade on traditional markets, and the last goal is to open the gate for large amounts of institutionalized money to flood the space. The biggest challenge they face, however, is to get institutions, regulators, merchants, and consumers to adopt Bitcoin, which could be more difficult than what most realize.
In a Medium post, Loeffler stated that Bakkt will be launching in November, and that she expected to receive approval for Bakkt from the Commodity Futures Trading Commission (CFTC) in the same month.
It is clear that Bakkt plans on being the go-to platform for various financial institutions to trade cryptocurrency securely, and it certainly could be the catalyst for the next large cryptocurrency bull run. But of course, this will depend on many factors.
There are many who believe that Bakkt is laying the groundwork for the first bitcoin ETF in the United States, which is a formidable task, considering that the SEC has rejected every bitcoin ETF proposal so far.