Although the crypto industry has been closely watching to see when the highly anticipated physically settled Bitcoin (BTC) futures platform Bakkt officially launches, they have now been beaten by their competitor – LedgerX – who officially launched today.
The platform is open to all US-based investors with a government issued ID and is not limited to institutional clients or high-net-worth clients. Despite this, most analysts believe that the benefits that physically settled futures contracts will bring to the crypto markets come primarily from the institutions that will trade them.
LedgerX Wins Race to Be First to Launch Physically Settled Bitcoin Futures Contract
Currently, there are three main platforms that are competing to gain the attention of investors who are interested in trading physically settled Bitcoin futures contracts, with LedgerX, the ICE-backed Bakkt, and the TD Ameritrade-backed ErisX, all launching similar products.
The primary benefit that a physically settled future contract brings is that it allows traders to deposit and collect Bitcoin in order to directly trade the contracts, without having to use USD or other fiat currencies as the trading pair, thus subverting the traditional banking system entirely.
This is a critical feature for a decentralized currency like Bitcoin, assuming that it will one day be utilized as a currency in its own right, and not one that is denominated and traded against fiat currencies.
Importantly, it does appear that there is significant interest in these contracts, as LedgerX has previously noted that multiple institutional investors have asked for these contracts in the past.
Will Institutional Demand for Physically Settled BTC Futures Contracts Propel the Markets?
Although retail interest in the crypto markets has been diving as of late, many analysts and investors alike are closely watching to see how interested institutions are in the nascent markets, as they may be the next source of major funding that propels Bitcoin (BTC) and the aggregated crypto markets.
Sam Doctor, a strategist at Fundstrat Global Advisors, recently explained that Bakkt – one of LedgerX’s competitors – could be a major catalyst for institutional demand for Bitcoin and other cryptocurrencies.
“We think #Bakkt could be a huge catalyst for institutional participation in the #crypto market. Here are our takeaways from the Bakkt institutional summit yesterday at the NYSE,” he said while referencing the talking points seen in the image below.
We think #Bakkt could be a huge catalyst for institutional participation in the #crypto market. Here are our takeaways from the Bakkt institutional summit yesterday at the NYSE… #bitcoin #BTC #ETH @fundstrat @fundstrat_ken pic.twitter.com/lkRylD1P4C
— Sam Doctor (@fundstratQuant) July 19, 2019
Although it still remains unclear as to how interested institutions truly are in the volatile crypto markets, interest in physically settled futures contracts could be a bullish sign, and these platforms will undoubtedly provide a gateway for a massive influx of fresh capital into the markets.
Featured image from Shutterstock.