Crypto Markets Are Up $20 Billion Since Bakkt Announced Launch of Futures Platform

The launch of Bakkt‘s futures and custody platform is being greeted positively in the cryptocurrency community – at least, that’s what the market data seem to show.

To be perfectly clear, bitcoin‘s slow and steady accumulation since Friday has been the primary catalyst for the market’s reversal. But what’s fueling bitcoin? Bakkt likely forms part of the answer.

Crypto Market Update

Cryptocurrency prices have been trending mostly higher over the last three days, with bitcoin approaching $11,000, Ethereum returning above $200 and XRP circling the 28-cent mark. These levels are well short of their respective peaks, but represent a notable improvement from last week’s selloff.

The combined value of cryptocurrencies plunged to the $253 billion range last Thursday. Assets recovered modestly heading into Friday’s session, when Bakkt made its major announcement. Since then, the cryptocurrency market has appreciated by around $22 billion.

The combined value of all cryptocurrencies reached $282.2 billion in early Tuesday trading. | Source: CoinMarketCap.

While altcoins and tokens have followed in bitcoin’s lead, their share of the overall crypto pie has fallen to less than 31%. Bitcoin rose more than 5% early Tuesday to trade at $10,900.

Some of the other top performers included bitcoin SV, which rose 6.4% to $145, and Ethereum, which added 4% to $202.

Is Bakkt a Game Changer?

Bakkt isn’t the first futures market dedicated to bitcoin, but it’s the only one to settle contracts in the virtual currency. If Bakkt takes off like its backers believe it will, we could see a large spike in bitcoin demand. Once again, that’s because buyers will receive physical bitcoin in their account instead of the difference in fiat currency.

Unlike the futures market operated by CME Group, Bakkt’s infrastructure consists of a trading platform, a digital vault and a clearing house. With Bakkt, “the credit risk of the counter party will be eliminated, the risk of recurrence of the collapse of Mt.Gox will disappear,” according to 4-C Trading.

When Bakkt was first introduced to the world back in August 2018, the startup had far greater ambitions than a crypto trading platform. Rather, Bakkt wanted to “bring regulated, connected infrastructure together with institutional and consumer applications for digital assets.”

In other words, Bakkt wants to create a global ecosystem where cryptocurrencies are traded and used as payments. To that end, it has secured major partnerships with brands like Starbucks and Microsoft, not to mention $740 million in Series A funding from major investors.

While there’s no guarantee Bakkt will succeed, the growth of Grayscale’s bitcoin trust and CME’s futures contracts suggest institutional demand is rising. Then there’s the obvious: Intercontinental Exchange has devoted a lot of resources to the startup. It would have seemed extremely far-fetched just 18 months ago that the world’s largest stock exchange operator would be creating a cryptocurrency platform. Beginning September 23, it will become a reality.

Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock. Chart via TradingView. 

Chief Editor to and Contributor to, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi