Topic: Bakkt launching on Dec12, is it will start a bull run? - page 2. (Read 720 times)
ICE Futures U.S. offers physically delivered daily futures contracts on Bitcoin traded in BTC/USD (subject to regulatory approval). These contracts will be traded on ICE’s electronic trading platform, which offers industry-leading speed and reliability, regulated by the CFTC. All trades are cleared and guaranteed by ICE Clearing US, the central counterparty for all ICE cleared forex futures trades. Trades will result in physically delivered Bitcoin in ICE’s regulated Digital Asset Warehouse.
No, they have clearly said that every contract will be backed by a physical bitcoin in their custodial bitcoin fund.
comex gold contracts are also "backed by physical gold" in name. but based on comex's gold vaults vs outstanding longs, it is physically impossible for that to be true. comex has enough assets on its books to cover longs, but not with physical gold.
in other words, comex gold contracts are indeed "fully collateralized" but they are not "fully collateralized with physical gold". you see the distinction, right?
this is how wall street operates and there are no regulations against it. why would bakkt operate differently than the other commodity markets, including those offered by its parent company (ICE)?
You are making a second point, but he said "btc are not held in trust." That is not true. They are held.
i can't speak for anyone else, but as i read it, you're omitting important context: "This is not an ETF: BTC are not held in trust with shares issued against them". i think the point was about whether contracts are fully collateralized by bitcoins ("issued against them"). a bitcoin ETF can't legally issue shares beyond the bitcoins held in its trust. that's not true for bakkt, comex, CME or anyone else offering "physically backed" futures contracts. i agree with that statement. in researching the gold markets, i've dug through enough CFTC reports to know.
when i read through bakkt's published releases, i notice their words have been chosen extremely carefully. is it "fully collateralized" or "fully collateralized by physical bitcoins"? we'll find out when their legal filings are made public.
for now, this is all speculation on both sides. but i see no reason to take their word for anything, especially when it flies in the face of common wall street practices. these guys aren't bitcoiners; it's the friggin ICE.
Jesus. Bitcoin is NOT gold. Holding physical gold is about 100x more difficult than holding digital bitcoin in a wallet. What is up with you guys speculating facts away?
They either have a bitcoin storage or they dont. They do.
Saying they are going to hold physical bitcoins in a wallet means they are going to hold physical bitcoins in a wallet.
No, they have clearly said that every contract will be backed by a physical bitcoin in their custodial bitcoin fund.
comex gold contracts are also "backed by physical gold" in name. but based on comex's gold vaults vs outstanding longs, it is physically impossible for that to be true. comex has enough assets on its books to cover longs, but not with physical gold.
in other words, comex gold contracts are indeed "fully collateralized" but they are not "fully collateralized with physical gold". you see the distinction, right?
this is how wall street operates and there are no regulations against it. why would bakkt operate differently than the other commodity markets, including those offered by its parent company (ICE)?
You are making a second point, but he said "btc are not held in trust." That is not true. They are held.
i can't speak for anyone else, but as i read it, you're omitting important context: "This is not an ETF: BTC are not held in trust with shares issued against them". i think the point was about whether contracts are fully collateralized by bitcoins ("issued against them"). a bitcoin ETF can't legally issue shares beyond the bitcoins held in its trust. that's not true for bakkt, comex, CME or anyone else offering "physically backed" futures contracts. i agree with that statement. in researching the gold markets, i've dug through enough CFTC reports to know.
when i read through bakkt's published releases, i notice their words have been chosen extremely carefully. is it "fully collateralized" or "fully collateralized by physical bitcoins"? we'll find out when their legal filings are made public.
for now, this is all speculation on both sides. but i see no reason to take their word for anything, especially when it flies in the face of common wall street practices. these guys aren't bitcoiners; it's the friggin ICE.
If it's bitcoin-settled then the price must go up. I have lost track of what Bakkt will actually deliver at least on the initial phases. From what I've heard the platform will deliver bitcoin-settled contracts, this means that his is not some phantom derivatives bullshit in which no bitcoins are being traded, so it must have an impact on the market one way or another.
We'll have to wait and see. Any instant changes on the market will just be speculation on the news unless some big players have moves already planned for launch day but someone needs to confirm that actual BTC is used to settle contracts.
We'll have to wait and see. Any instant changes on the market will just be speculation on the news unless some big players have moves already planned for launch day but someone needs to confirm that actual BTC is used to settle contracts.
No, they don't. They need assets equivalent to the USD value of outstanding Bitcoin contracts. This is not an ETF: BTC are not held in trust with shares issued against them.
Again, the proper parallel is CME/COMEX physically-settled gold markets. There are way more gold contracts than gold in their vaults. There are multiple registered "owners" for every physical claim to gold.
If everyone who is long BTC on BAKKT wanted to physically settle, they probably couldn't. The truth is, they probably don't want to. Like the gold markets, the vast majority of market participants are just betting on the price. They don't want to accumulate the underlying.
Which brings us back to why cash-settled futures are perfectly appropriate for institutional exposure to BTC.
Again, the proper parallel is CME/COMEX physically-settled gold markets. There are way more gold contracts than gold in their vaults. There are multiple registered "owners" for every physical claim to gold.
If everyone who is long BTC on BAKKT wanted to physically settle, they probably couldn't. The truth is, they probably don't want to. Like the gold markets, the vast majority of market participants are just betting on the price. They don't want to accumulate the underlying.
Which brings us back to why cash-settled futures are perfectly appropriate for institutional exposure to BTC.
You are just wrong on this point.
I've been around these parts since 2013 and have seen literally 100s of people also wrong about equivalent points in the past.
You need to do more research if you aren't just trolling.
Simple fact: Bakkt will custodian all bitcoins purchased at the end of each day (futures expiration).
the bolded might be the point at issue. you guys are talking about two different things. i'm not sure that he's wrong.
do you actually have proof that all bakkt contracts will be fully collateralized? where is that specified? that's not required by the CFTC as he pointed out with the comex markets.
i'm not sure myself, but i pointed this out in another thread because this "fully backed" talk doesn't seem to be based in fact. i think it's actually a legitimate point of contention:
the contracts are supposed to settle in coins, but some worry that if bakkt is run like the ICE and other wall street exchanges, that this will lead to fractional reserve practices:
Quote
Caitlin Long, who spent more than two decades on Wall Street and co-founded the Wyoming Blockchain Coalition, said that she was partially-pleased by Loeffler’s post, which answered some questions that she and others had been asking about ICE’s handling of bitcoin, specifically about explicit leverage and margin trading.
However, she noted that the post was silent on what she calls “hidden leverage,” through which institutions commingle and rehypothecate different types of collateral (bitcoins, physical USD, securities, etc.), which involves substituting them for one another on their balance sheet as well as allow multiple parties to declare ownership of the same asset on their financial statements.
These practices, Long says, are standard on Wall Street and could serve to taint bitcoin’s fixed currency supply with elements of the wider financial system, which relies on fractional-reserve banking.
https://finance.yahoo.com/news/nyse-owner-bitcoin-market-may-205553702.html
However, she noted that the post was silent on what she calls “hidden leverage,” through which institutions commingle and rehypothecate different types of collateral (bitcoins, physical USD, securities, etc.), which involves substituting them for one another on their balance sheet as well as allow multiple parties to declare ownership of the same asset on their financial statements.
These practices, Long says, are standard on Wall Street and could serve to taint bitcoin’s fixed currency supply with elements of the wider financial system, which relies on fractional-reserve banking.
https://finance.yahoo.com/news/nyse-owner-bitcoin-market-may-205553702.html
the "simple fact" above doesn't actually speak to the point made about comex gold futures, or to caitlin long's point above. you're talking about the "net" long deliverables, not all outstanding long contracts, which may or may not actually be fully backed.
it's a well known fact that comex gold futures aren't fully backed, even though they are physically deliverable. what makes you so sure that bakkt bitcoin futures would operate differently? it's obviously not required by the CFTC, which is why it's common practice on wall street for firms to "commingle and rehypothecate" different types of collateral for balance sheet purposes.
No, they have clearly said that every contract will be backed by a physical bitcoin in their custodial bitcoin fund. The reason that it is a 1 day futures contract is so they can make sure they acquire the necessary backing bitcoins for each purchase that has not been sold. This information is not hard to find. Long has concerns, that's fine and justifiably so, but her hidden leverage concern is entirely different from the point that I made that is fact.
You are making a second point, but he said "btc are not held in trust." That is not true. They are held.
No, they don't. They need assets equivalent to the USD value of outstanding Bitcoin contracts. This is not an ETF: BTC are not held in trust with shares issued against them.
Again, the proper parallel is CME/COMEX physically-settled gold markets. There are way more gold contracts than gold in their vaults. There are multiple registered "owners" for every physical claim to gold.
If everyone who is long BTC on BAKKT wanted to physically settle, they probably couldn't. The truth is, they probably don't want to. Like the gold markets, the vast majority of market participants are just betting on the price. They don't want to accumulate the underlying.
Which brings us back to why cash-settled futures are perfectly appropriate for institutional exposure to BTC.
Again, the proper parallel is CME/COMEX physically-settled gold markets. There are way more gold contracts than gold in their vaults. There are multiple registered "owners" for every physical claim to gold.
If everyone who is long BTC on BAKKT wanted to physically settle, they probably couldn't. The truth is, they probably don't want to. Like the gold markets, the vast majority of market participants are just betting on the price. They don't want to accumulate the underlying.
Which brings us back to why cash-settled futures are perfectly appropriate for institutional exposure to BTC.
You are just wrong on this point.
I've been around these parts since 2013 and have seen literally 100s of people also wrong about equivalent points in the past.
You need to do more research if you aren't just trolling.
Simple fact: Bakkt will custodian all bitcoins purchased at the end of each day (futures expiration).
the bolded might be the point at issue. you guys are talking about two different things. i'm not sure that he's wrong.
do you actually have proof that all bakkt contracts will be fully collateralized? where is that specified? that's not required by the CFTC as he pointed out with the comex markets.
i'm not sure myself, but i pointed this out in another thread because this "fully backed" talk doesn't seem to be based in fact. i think it's actually a legitimate point of contention:
the contracts are supposed to settle in coins, but some worry that if bakkt is run like the ICE and other wall street exchanges, that this will lead to fractional reserve practices:
Quote
Caitlin Long, who spent more than two decades on Wall Street and co-founded the Wyoming Blockchain Coalition, said that she was partially-pleased by Loeffler’s post, which answered some questions that she and others had been asking about ICE’s handling of bitcoin, specifically about explicit leverage and margin trading.
However, she noted that the post was silent on what she calls “hidden leverage,” through which institutions commingle and rehypothecate different types of collateral (bitcoins, physical USD, securities, etc.), which involves substituting them for one another on their balance sheet as well as allow multiple parties to declare ownership of the same asset on their financial statements.
These practices, Long says, are standard on Wall Street and could serve to taint bitcoin’s fixed currency supply with elements of the wider financial system, which relies on fractional-reserve banking.
https://finance.yahoo.com/news/nyse-owner-bitcoin-market-may-205553702.html
However, she noted that the post was silent on what she calls “hidden leverage,” through which institutions commingle and rehypothecate different types of collateral (bitcoins, physical USD, securities, etc.), which involves substituting them for one another on their balance sheet as well as allow multiple parties to declare ownership of the same asset on their financial statements.
These practices, Long says, are standard on Wall Street and could serve to taint bitcoin’s fixed currency supply with elements of the wider financial system, which relies on fractional-reserve banking.
https://finance.yahoo.com/news/nyse-owner-bitcoin-market-may-205553702.html
the "simple fact" above doesn't actually speak to the point made about comex gold futures, or to caitlin long's point above. you're talking about the "net" long deliverables, not all outstanding long contracts, which may or may not actually be fully backed.
it's a well known fact that comex gold futures aren't fully backed, even though they are physically deliverable. what makes you so sure that bakkt bitcoin futures would operate differently? it's obviously not required by the CFTC, which is why it's common practice on wall street for firms to "commingle and rehypothecate" different types of collateral for balance sheet purposes.
The more people expect Bakkt to initiate a bull run, the more convinced I am that it won't. I haven't seen anyone predict a bull run or even a rally correctly in the years that I have been here, and I don't see that change this time.
What makes things even worse is how Bakkt goes live during a bear market, and that's not really the best time to start in crypto. It's a market that thrives on positive sentiment, and that's lacking this year.
Institutions ignored Coinbase's index fund which was physically backed by a basket of crypto currencies. Coinbase shut it down not that long ago, likely because no one even bothered to invest in it.
What makes things even worse is how Bakkt goes live during a bear market, and that's not really the best time to start in crypto. It's a market that thrives on positive sentiment, and that's lacking this year.
Institutions ignored Coinbase's index fund which was physically backed by a basket of crypto currencies. Coinbase shut it down not that long ago, likely because no one even bothered to invest in it.
There might be a speculative increase at launch, just because traders get excited and buy up the market, but nothing more than that.
The main reason that it won't be coming from Bakkt itself is because it has very likely enough coins in reserves to deliver already, all bought through the OTC market. The only way for them to buy up new coins is to have the demand shrink their reserves to such degree, that they are forced to buy another load of coins, which will be done through the OTC market again.
The positive aspect however is that with various competing coin backed products, that it will slowly dry out the OTC market, which eventually might force these entities to touch the spot market, but that's far away from this point. Let's first see what happens with Bakkt and if there is enough demand.
The main reason that it won't be coming from Bakkt itself is because it has very likely enough coins in reserves to deliver already, all bought through the OTC market. The only way for them to buy up new coins is to have the demand shrink their reserves to such degree, that they are forced to buy another load of coins, which will be done through the OTC market again.
The positive aspect however is that with various competing coin backed products, that it will slowly dry out the OTC market, which eventually might force these entities to touch the spot market, but that's far away from this point. Let's first see what happens with Bakkt and if there is enough demand.
Golden Sachs is already onboarded to use Bakkt. I am sure there are several others as well. I agree the effect will most likely be felt over time. Sellers have started to show signs of drying up, so marginal increases in demand will start to move the market a little at a time.
There might be a speculative increase at launch, just because traders get excited and buy up the market, but nothing more than that.
The main reason that it won't be coming from Bakkt itself is because it has very likely enough coins in reserves to deliver already, all bought through the OTC market. The only way for them to buy up new coins is to have the demand shrink their reserves to such degree, that they are forced to buy another load of coins, which will be done through the OTC market again.
The positive aspect however is that with various competing coin backed products, that it will slowly dry out the OTC market, which eventually might force these entities to touch the spot market, but that's far away from this point. Let's first see what happens with Bakkt and if there is enough demand.
The main reason that it won't be coming from Bakkt itself is because it has very likely enough coins in reserves to deliver already, all bought through the OTC market. The only way for them to buy up new coins is to have the demand shrink their reserves to such degree, that they are forced to buy another load of coins, which will be done through the OTC market again.
The positive aspect however is that with various competing coin backed products, that it will slowly dry out the OTC market, which eventually might force these entities to touch the spot market, but that's far away from this point. Let's first see what happens with Bakkt and if there is enough demand.
Why do you think Wall St investors aren't waiting for a regulated exchange before getting into Bitcoin. How is that nonsensical? That is probably what a lot of them are waiting for.
Ever heard of LedgerX? They are a CFTC-approved swap execution facility. They offer physically-settled Bitcoin derivatives, including options and swaps. They are a clearinghouse that handles Bitcoin custody on behalf of brokers and clients. They were approved by the CFTC well over a year ago. Now they're waiting for CFTC approval for physically-settled Ethereum derivatives.
What were you saying about regulated exchanges again?
I also find it baffling how people say "cash-settled futures" (like the Cboe and CME Bitcoin markets) aren't appropriate for Wall Street because it's just "betting on the price." What exactly do you think derivative markets are for, if not speculative exposure to market volatility? If an institution wants exposure to the Bitcoin market, why would they specifically not want to acquire CME Bitcoin quarterlies? If they wanted exposure past settlement date, why couldn't they just roll over their contracts?
Wall St mostly has no interest in throwing their money into these crypto exchanges that get hacked every few months.
Nobody said anything like that. LedgerX and CME =/= Mt Gox and Bitfinex. More importantly, there are several robust institutional custody solutions and a liquid OTC market. That's why hedge funds have been in the game for several years already.
The point of physically settled bitcoin futures on BAKKT is that BAKKT has to actually hold all the Bitcoin. They have to buy up the supply for whatever volume they have.
No, they don't. They need assets equivalent to the USD value of outstanding Bitcoin contracts. This is not an ETF: BTC are not held in trust with shares issued against them.
Again, the proper parallel is CME/COMEX physically-settled gold markets. There are way more gold contracts than gold in their vaults. There are multiple registered "owners" for every physical claim to gold.
If everyone who is long BTC on BAKKT wanted to physically settle, they probably couldn't. The truth is, they probably don't want to. Like the gold markets, the vast majority of market participants are just betting on the price. They don't want to accumulate the underlying.
Which brings us back to why cash-settled futures are perfectly appropriate for institutional exposure to BTC.
Nope.
It makes future bull runs potentially stronger as that infrastructure is there waiting to be stampeded into. It will not initiate any type of stampede. Same goes for any ETF should it ever arrive. It won't create demand. It'll facilitate more of it when the demand arrives from other factors.
It makes future bull runs potentially stronger as that infrastructure is there waiting to be stampeded into. It will not initiate any type of stampede. Same goes for any ETF should it ever arrive. It won't create demand. It'll facilitate more of it when the demand arrives from other factors.
I'm glad there's someone sensible in the room. If I see another person exclaim "Bakkt is the catalyst for the next bull run" I think I'll throw up. No investors out there are "waiting for Bakkt to launch" before getting exposure to BTC. That's completely nonsensical.
These futures are physically delivered and not leveraged. Which is entirely different than the futures from last December. Here they will actually be receiving Bitcoins, instead of just making bets on the price. Also futures is just the first product, I'm sure it won't take too long for them to introduce actual Bitcoin trading on BAKKT.
Perhaps not leveraged with margin, but they are highly unlikely to be fully collateralized since they don't have to be. Take a look at the paper gold market for inspiration. Most "physically settled" gold contracts are never delivered.
What makes you think they'll offer spot trading? The ICE mostly offers futures and options markets. Even their "physical" markets are all still contracts that settle based on an index of spot, forward, and derivative market prices.
Why do you think Wall St investors aren't waiting for a regulated exchange before getting into Bitcoin. How is that nonsensical? That is probably what a lot of them are waiting for. Wall St mostly has no interest in throwing their money into these crypto exchanges that get hacked every few months. They require a much safer environment, and they are really only interested in operating in their own environment - operating with other institutions on Wall St. That is what BAKKT is. I find it bizarre that anyone would think BAKKT isn't a huge deal. I don't expect an immediate crazy price run because even when BAKKT launches I think it'll take time for many Wall St players to start buying in, but December 12th is the start of the flood. All the money that has ever been put into Bitcoin so far will be laughable once Wall St has regulated Bitcoin exchanges and ETFs and whatnot to make money from.
Maybe they won't offer spot trading, I dunno, I read that they will be offering more and more services, and with the way BAKKT is talking about wanting to spread the investment and usage of Bitcoin to everyone I can only assume they will open up spot trading eventually. Regardless, other Wall St institutions will (we already know Fidelity and Goldman Sachs are creating their own Bitcoin services, no doubt many more will in the next 12 - 24 months). The point of physically settled bitcoin futures on BAKKT is that BAKKT has to actually hold all the Bitcoin. They have to buy up the supply for whatever volume they have. As supply goes down in the broader market demand gets pinched and price goes up, simple market economics.
Absolutely not. It's just another service provider in which people can use its platform to make things happen, but it's not the one who will spark the fire per se. I don't see any significance in Bakkt's launch but only hype and nothing more. It will not create demand out of thin air as if it's the only thing that this present market is waiting for., same as the ETFs that most people are banking on, thinking that it's approval will be on par with bull runs and crazy gains.
BAKKT is where Wall St will be able to start entering the market in a regulated exchange though. That is unique in the market. I don't think the effect will be immediate but it will introduce real new demand, not demand out of thin air. Since it is a Wall St exchange, eventually BAKKT will bring in huge amounts of money and will probably dwarf the size of any other normal crypto exchange. The demand is there in Wall St, and they will slowly roll many billions into BAKKT as they become more confident the bear market is behind us. Make no mistake, Wall St can make all the money that has ever been put into Bitcoin look like pocket change, and they likely will in the coming years.
Nope.
It makes future bull runs potentially stronger as that infrastructure is there waiting to be stampeded into. It will not initiate any type of stampede. Same goes for any ETF should it ever arrive. It won't create demand. It'll facilitate more of it when the demand arrives from other factors.
It makes future bull runs potentially stronger as that infrastructure is there waiting to be stampeded into. It will not initiate any type of stampede. Same goes for any ETF should it ever arrive. It won't create demand. It'll facilitate more of it when the demand arrives from other factors.
I'm glad there's someone sensible in the room. If I see another person exclaim "Bakkt is the catalyst for the next bull run" I think I'll throw up. No investors out there are "waiting for Bakkt to launch" before getting exposure to BTC. That's completely nonsensical.
These futures are physically delivered and not leveraged. Which is entirely different than the futures from last December. Here they will actually be receiving Bitcoins, instead of just making bets on the price. Also futures is just the first product, I'm sure it won't take too long for them to introduce actual Bitcoin trading on BAKKT.
Perhaps not leveraged with margin, but they are highly unlikely to be fully collateralized since they don't have to be. Take a look at the paper gold market for inspiration. Most "physically settled" gold contracts are never delivered.
What makes you think they'll offer spot trading? The ICE mostly offers futures and options markets. Even their "physical" markets are all still contracts that settle based on an index of spot, forward, and derivative market prices.
Absolutely not. It's just another service provider in which people can use its platform to make things happen, but it's not the one who will spark the fire per se. I don't see any significance in Bakkt's launch but only hype and nothing more. It will not create demand out of thin air as if it's the only thing that this present market is waiting for., same as the ETFs that most people are banking on, thinking that it's approval will be on par with bull runs and crazy gains.
No.
And much less the ETF.
And much less the ETF.
I don't think it will immediately launch of into the next bull run, but I think over the course of a few months as more institutions use BAKKT it will help start the bull run. It is going to create a lot of new demand, but I think Wall St will be slow to dive in, so it will be a gradual effect. I think the market needs to trade sideways for a few months before starting to really move up again. Now if BAKKT starts having a lot of volume quickly then I think it could initiate the next bull market, but it seems that institutions on Wall St don't want to be the first into Bitcoin, so I think they'll warm up to it over a few months and maybe by February or March we'll start seeing some solid volume on BAKKT and Bitcoin's price will start moving up, breaking into the next long bull run.
That is just futures and if we have seen enough of the futures so far and how they affect the prices of bitcoin I think just futures would be really scary for all of us. Even with bitmex that is basically our own we are still seeing a lot of people betting on bitcoin going down and whales spending millions of dollars into short futures and trying to keep the price as low as miners allow them and try to make as much money from it as possible.
Futures are creating a conondurum which allows rich people to both sell bitcoin (create capital for themselves) and at the same time buy short futures with that same money and make double the income. Whereas if they want to make money by buying long futures they would have to both buy bitcoin to increase the price (costs capital) and buy long futures at the same time (costs capital as well) which means they need to spend double the amount for probably even less profit.
Futures are creating a conondurum which allows rich people to both sell bitcoin (create capital for themselves) and at the same time buy short futures with that same money and make double the income. Whereas if they want to make money by buying long futures they would have to both buy bitcoin to increase the price (costs capital) and buy long futures at the same time (costs capital as well) which means they need to spend double the amount for probably even less profit.
These futures are physically delivered and not leveraged. Which is entirely different than the futures from last December. Here they will actually be receiving Bitcoins, instead of just making bets on the price. Also futures is just the first product, I'm sure it won't take too long for them to introduce actual Bitcoin trading on BAKKT.
Nope.
It makes future bull runs potentially stronger as that infrastructure is there waiting to be stampeded into. It will not initiate any type of stampede. Same goes for any ETF should it ever arrive. It won't create demand. It'll facilitate more of it when the demand arrives from other factors.
It makes future bull runs potentially stronger as that infrastructure is there waiting to be stampeded into. It will not initiate any type of stampede. Same goes for any ETF should it ever arrive. It won't create demand. It'll facilitate more of it when the demand arrives from other factors.
Jump to: