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ICE’s Bakkt Paves Way for Institutional Investors, Experts Hold

Georgi Georgiev | Aug 12, 2018 | 13:00

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The digital asset platform Bakkt has one feature which the market has been “crying for” according to CEO of an institutional Forex exchange.

“This is What The Market Has Been Crying For”

David Mercer, CEO of LMAX Exchange – the institutional exchange for global Forex trading as well as the operator of cryptocurrency exchange LMAX Digital, thinks that Bakkt’s 1-day futures contract which physically delivers bitcoin is the game changer the market has been looking for.

Unlike cash-settled futures contract where the trader receives or pays the difference between the price 00 at which he purchased the contract and the price of its settlement, physical-settled ones remunerate the trader with a physical bitcoin.

According to Garret See of the investment firm DV Chain, this makes trader a lot less risky and it also facilitates better arbitrage trades. Fundstrat’s Tom Lee also holds that this is a substantial advantage over existing cryptocurrency exchanges like Binance and Coinbase.

This feature of Bakkt, though, resembles the commodity-backed VanEck/SolidX bitcoin ETF proposal – arguably making the latter redundant.

“A Very, Very Big Deal”

Physically-settled bitcoin futures would also mark a key development in the market because they would require a bitcoin infrastructure to transfer cryptocurrencies. Furthermore, they would also require the go-ahead from the Commodity Futures Trading Commission (CFTC).

Bakkt is intended to have all of the above handled:

As an initial component of the Bakkt offering, Intercontinental Exchange’s U.S.-based futures exchange and clearing house plan to launch a 1-day physically delivered Bitcoin contract along with physical warehousing in November 2018, subject to CFTC review and approval. – reads the official release.

Patrick Rooney of Trading Technologies commented on the matter, saying:

That’s massive. A very, very big deal.

Others have also expressed the importance of a custody solution from a trusting source. According to investment expert Mike Novogratz, this is what would drive the next big increase in Bitcoin’s price:

I think the next move up is going to need custody from a trusting source. It’s going to need a little more regulatory clarity. […] We wouldn’t take out $10,000 without those two things because that’s what brings the institutional investors in. But we’re going to get there.

Do you think Bakkt’s launch will spark the next bull-run? Let us know in the comments below!

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