After a year of waiting, Bakkt, the bitcoin futures exchange and digital assets platform from Intercontinental Exchange (ICE), the creator of New York Stock Exchange (NYSE), is ready to launch this month. The launch, slated for September 23, is expected to bring significant institutional investment into the crypto space. Here’s what we do know about Bakkt’s Bitcoin Futures so far
What are Bitcoin Futures?
In a futures contract, the purchase or sale of an underlying asset at a predetermined price on a future date is specified. The transacting parties are obligated to fulfill their part of the contract, that is, buying or selling the concerned asset upon the expiry of the contract. With futures contracts, investors speculate the price movement of the concerned asset and hedge their risk.
Investors can either choose to go for long positions where they agree to “buy” the asset at a specified price in the future when the contract expires, or they can opt for a short position, where they “sell” the asset at a predetermined price upon the expiry of the contract.
Bitcoin futures also work like the futures contracts of traditional assets. Investors get to speculate on the price of Bitcoin and earn from it without actually owning it.
In the case of Bakkt’s bitcoin futures, the futures contracts are physically settled. Bakkt offers physical delivery of assets for futures contracts, but Bitcoin remains in their custody service, Bakkt warehouse instead of in the possession of the investor in a wallet.
Bakkt Bitcoin (USD) Daily Futures Contract
This is a physically-settled daily futures contract for bitcoin held in the Bakkt Warehouse with the Trading Screen Product Name “Bakkt BTC (USD) Daily Future” and Trading Screen Hub Name “ICUS”.