Bakkt Bitcoin Futures — Get Ready for Major Bitcoin Price Movements
Bakkt Bitcoin futures are almost here. On September 23rd, Bakkt Bitcoin futures will start trading on the Intercontinental Exchange (ICE). This promises to be a major milestone for Bitcoin. Bakkt Bitcoin futures contracts, after all, are the same as long-awaited Bitcoin ETFs. — At least in everything but name.
Do you trade or invest in cryptocurrency? If so, it is important to understand exactly what Bakkt might mean for your Bitcoin holdings.
What are Bakkt Bitcoin Futures?
As most cryptocurrency traders know, late 2017 saw the launch of several Bitcoin-based futures on the Chicago Board Options Exchange (CBOE). Many traders and investors believed that futures contracts were a sign that institutional investors would soon start rushing to buy Bitcoin. Sadly, this didn’t happen.
Futures contracts work by allowing investors to bet for or against the Bitcoin price rising. With Bitcoin then at a near all-time high of $20,000, many futures traders chose to bet against Bitcoin. Doing so was subsequently successful in helping drive down Bitcoin prices on exchanges.
Thankfully, Bakkt Bitcoin futures are completely different from CBOE futures contracts. This is thanks to the fact that each are backed by real Bitcoin. This means that when traders buy futures contracts, they essentially buy real Bitcoin and have a vested interest in the Bitcoin price rising.
How will Bakkt Bitcoin Futures Affect the Markets?
When Bakkt futures launch on September 23rd, one of two things will happen. Wall Street traders and institutional investors will either start buying and trading futures contracts or they won’t.
In the (expected) event that institutional money does start flowing into Bitcoin, the Bitcoin price could make significant gains. There are also several reasons why Bakkt should prove popular.
- Many believe that the Stock Market is on the cusp of a possible 70% correction.
- Global property sales, car sales, and equity investments have been slowing throughout 2019.
- Bitcoin is widely regarded as recession-proof, thanks to Bitcoin being deflationary by design.
To compound the above, the ongoing China trade war, Brexit, and geopolitical instability in the Middle East, all have Wall Street on edge. In effect, Bakkt, therefore, gives institutional investors a way to safeguard wealth in the face of the threat of a major economic downturn.
What if Institutional Money Doesn’t Start Flowing into Bakkt?
For the sake of objectivity, it is important to note that institutional investors could just as easily shun Bakkt. If this were to happen, the Bitcoin price could correct sharply.
The message from the markets would essentially be one of, “we don’t believe that Bitcoin is mature enough to be worthy of investment.” Moreover, in a worst-case scenario, this could be disastrous for Bitcoin.
From 2009 until today, the Bitcoin price has been driven by predominantly consumer investment. If Bakkt Bitcoin futures contracts fail to entice institutional investors, consumer investors could get spooked and start liquidating holdings.
How Should You Prepare for Bakkt?
It is unlikely that institutional investors will shun Bakkt. Many will appreciate the fact that Bitcoin halving in 2020 gives them a potential opportunity to double their money. However, traders should remain vigilant as Bakkt launches.
- Remember that even in a best-case scenario, consumer investors who bought Bitcoin at an all-time high of $20,000, may cash out holdings if the Bitcoin price does skyrocket.
- Keep in mind that bear and bull traps after Bakkt launches will likely become more commonplace.
- Be vigilant and don’t buy Bitcoin now or if the Bitcoin price starts to rise quickly out of fear of missing out. This is always the easiest way to get burned.
Given the uncertainty surrounding Bakkt, now is also a time for traders to consider upping their game and investing in a reliable trading bot. Doing so can help remove the emotional risks associated with trading. This will be especially important if new institutional capital does start flooding into Bitcoin.