Remember, as of November 7, 2017 Leo Melamed (Leo Melamed), Chairman of CME, said the exchange is going to “curb” bitcoin? Then he said:
“We will focus on legislative regulation, will make BTC not so wild. We’ll discipline him in the usual form of instrument that is traded according to the rules.”
Soon after, on 17 December 2017 CME launched futures on bitcoin, which is opened and closed not in the coins and Fiat. Thus, people have a convenient tool to open shorts on BTC.
However, we can now stand on the threshold of significant changes. Bakkt finally got approval from the CFTC to launch a futures with physical security. The launch is scheduled on September 23, 2019, after about a month.
When Melamed issued a statement, many ignored him. It was difficult to see the potential of such negative news, when the mind is clouded even things like Bitconnect. In a bull market the brain unconsciously ignore the negative news. I was waiting for a hike BTC to $50K. What has changed in 2019?
For starters, the futures Bakkt provided BTC for the exchange even has its own “warehouse”. Thus, in contrast to the CME, traders will need to close their positions using bitcoin, as it does on BitMEX. To ensure such operations Bakkt need to have some reserves of BTC, which the exchange will take (or already took) from the open market.
In a recent paper, Kelly Leffler (Kelley Leffer) writes that Bakkt received approval from the CFTC in the framework of self-certification and testing has begun. Also, she talks about creating Bakkt Trust Company approved by the government of new York warehouse bitcoin to ensure that traded futures. Thus, institutional investors need to receive clear and reliable platform for market entry.
Interestingly, the futures will not be used prices on unregulated spot markets to close. This formulation of the process should allow the exchange to become a transparent platform for pricing, free from manipulation inherent in the exchanges with fake volume.
Another noteworthy fact is that Kelly quotes Milton Friedman who many see as the predictor of the coming BTC. In an interview in 1999, Friedman says:
“I think that the Internet will greatly reduce the influence of the state. Now we are missing one thing, but it will soon develop, and this electronic money. This should allow you to anonymously transfer funds between people. New e-money will simplify the use of the Internet. Of course, all this has its reverse side. Criminals conducting illegal transactions, will also benefit from a more convenient tool for its own operations.”
Now the market is still far from parabolic growth, which was in 2017. Interest Bakkt exists, but it is not so big, not as massive as the last bull market. The same can be said about the interest in bitcoin.
After a small spike amid rising prices in the spring, the interest falls due to price decline and sideways movement. From this we can conclude that the growth of BTC from the beginning of the year could be caused by institutional players.
Considering this fact, we should not expect the explosive increase in the price of BTC immediately after the launch of futures on Bakkt. Most likely, the exchange is already enough stock of coins, which were acquired through OTC transactions. However, the positive of the situation is that bitcoin becomes more distributed, reducing its Gini coefficient. Moreover, with the popularity of bitcoin institucionales Bakkt have to buy BTC, and we all know where that can lead with a constant decrease in inflation. All this, of course, in the long run.