Thriller Insights - S3EP9: Bitcoin Becomes Mainstream


Bakkt Launch Incoming…What to Expect:

On September 22, a product designed to remake Bitcoin as a mainstream investment for the world's investment managers will go live. When ICE Futures U.S., one of the world's largest commodities markets, opens trading at 8 p.m. ET that day, it will offer Bakkt Daily and Monthly Bitcoin Futures, the first physically delivered crypto-currency contracts ever traded on a federally regulated exchange.

If the exchange works as planned, it will give institutional investors a secure, well-monitored place to trade Bitcoin, the world's most widely used cryptocurrency. That in turn could help alleviate the problems with volatility and trustworthiness that have kept Bitcoin from being more widely adopted—giving the asset a major boost in legitimacy.

With the Bakkt futures, endowment funds or brokerage firms that trade the contracts will be able to channel their payments, and secure a guarantee that their Bitcoin will be delivered, through the same ICE clearinghouse that protects settles contracts traded by global oil giants. Their newly-purchased tokens will be stored in a super-secure warehouse overseen by the same team, deploying the same cyber-security measures, that safeguards their equity trades on the New York Stock Exchange.

The Bakkt brass stressed that their immediate goal is making Bitcoin a popular alternative investment along with gold and private equity. But an efficient, regulated market in the currency could eventually remake the way we pay for everything from coffee to airline tickets.

Bakkt's coup was creating a futures contract that trades like a spot contract. By purchasing Daily futures, a buyer gets physical Bitcoin delivered to his or her account the same day, just as on a spot exchange. The difference is that the Bakkt product boasts all the advantages of rigorous CFTC regulation of trading, clearing and ability use margin for leverage that money managers prize. The Bakkt Monthly Bitcoin Futures will establish centralized prices extending 12 months into the future.

It's likely that Bakkt will soon face plenty of competition. LedgerX and TD Ameritrade-backed ErisX, two prominent crypto trading firms, have won recognition as fully regulated "Designated Contract Markets" from the CFTC. They plan to launch contracts that will vie with the the Bakkt's contracts in trading physically delivered Bitcoin.

What about Bitcoin ETFs or mutual funds from, say, a Vanguard or Merrill Lynch? They're unlikely to arrive anytime soon. Since funds holding Bitcoin are securities, not commodities, they would be regulated by the SEC. And that agency has repeatedly told applicants that today's Bitcoin trading is not protected by adequate oversight. In particular, the SEC has noted that Bitcoin has no price established by a central exchange, making it difficult to establish reliable quotes for newly-created securities. On the other hand, if Bakkt acquires gigantic volumes, it could eventually set a global, benchmark price as ICE does now for Brent crude. In that scenario, Bitcoin purchased by asset managers on ICE Futures U.S. might pass the SEC's test for packaging Bitcoin into ETFs and mutual funds.

Get Caught Up on Bakkt - Previously on Thriller Crypto:

  1. Thriller Insights - S3EP7: Bakkt Warehouse Release in September

  2. Thriller Insider - S3EP5: BAKKT...Entering PHASE ONE

  3. Thriller Rundown - S3EP3: Bakkt Arrives

  4. Thriller Insights - S3EP2: Bakkt Incoming🚀

  5. Thriller Insider - S3EP 1: An Analysis on Bakkt & ErisX

Coin Analysis: Bitcoin

Bakkt launch is less than 48 hours away (Sept 23) and on Sept 27 6 months CME Futures Expire. Last time this happened was in March. Then we know what happened in April 🚀

The Chicago Mercantile Exchange (CME) Group posted record numbers in 2019 for its bitcoin futures trading, showing renewed interest in crypto's largest asset, with current trading activity up significantly from August last year.

"Year-to-date, bitcoin futures are averaging 7,237 contracts per day, which is a 132% increase from the same period last year,"

"There is a lot of broad investor interest in cryptocurrency, as well as growing interest in a variety of applications for cryptocurrencies and blockchain technology. It will be interesting to see how this new market continues to grow and scale.

Future Predictions:

On Wednesday, the author of the book "The Business Blockchain: Promise, Practice, and Application of the Next Internet Technology," William Mougayar, took to Twitter to share his fearless forecast on the possible year-end prices of top cryptos.

William Mougayar tweet on bitcoin, ethereum and other cryptos

What immediately caught our attention is the author’s predictions on the top two cryptos. Mr. Mougayar believes that bitcoin will print a new all-time high before the end of the year. Also, he thinks that Ethereum will be back at $1,000, which means a growth of over 360% in three months.

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