Crypto is once again top of the newsreels with countries all over the world starting to eye the price. Specifically, China has begun to build their own cryptocurrency for internal payment settlements, friction-less transfers, and daily transactions. Russia is not too far behind looking to build a similar project to potentially replace their foreign reserves similar to China.
In other news, Libra has been halted as Facebook seems to be facing unforeseen scrutiny from Congress. In light of this, Donald Trump even tweeted that if Facebook wants to become a bank, they will have to do it the traditional way. Additionally, he threw a bone to cryptocurrencys, namely Bitcoin, stating that they are thin air and worthless essentially. Little does Trump know, this was a huge buy signal for many investors.
Obviously, Trump is not wrong about the crime, but any currency could be used to illicit illegal activities. Just because a small group of people abuse Bitcoin and other cryptos does not mean the purpose of these new financial instruments is just that.
Traditional Finance
In other news, the traditional world is about to get a good indicator for the future of Bitcoin in finance. Bakkt will be launching their Beta testing of the physically settled Bitcoin futures for global use on July 22, 2019. Currently, there are over 30 countries that will be able to trade and speculate on the asset. In particular, these will be Bitcoin futures that are offered, which will open the door to more traditional derivatives down the line.
Let’s remember, Bakkt was projected to launch in December 12, 2018 before the massive dump of the market due to Craig Wright and his accomplices. This will be over 7 months from the initial launch date where we are only getting a closed Beta launch of the platform. The main delay is the ongoing regulatory uncertainty posed by the SEC, CFTC, and accompanying parties.
Robert Hackett, Senior writer for Fortune Magazine, has the right attitude. The launch of Bakkt is not a sprint, its a marathon, although most investors in the space might not treat it as such. It is very important for the entire industry that this platform is launched properly, fully regulated, and gains as much exposure as possible. With the recent launch of Libra, this should speed up the process forcing the U.S. regulatory bodies to come up more concrete solutions.
Traditional Derivatives
There is a large demand for the traditional vehicles like futures and derivatives on this market. For those who are unfamiliar with derivatives, these are the gold mine of large institutional money and financial wealth. Although In the case of Bakkt, there will only currently be two futures contracts enabled in the coming months as stated in their medium post.
Two futures contracts will be listed: 1) A daily settlement bitcoin future, which will enable customers to transact in a same-day market. And 2) a monthly bitcoin futures contract will enable trading in the front month and across the forward pricing curve.
– Medium, Kelly Loeffler
Now, this is exciting news, but the real news will come after the launch if Bakkt starts offering widely adopted derivatives.
The key difference between derivatives and futures is that derivatives are financial instruments whose value depends on the value of another underlying asset whereas futures is an agreement, to buy or sell a particular commodity or financial instrument at a predetermined price at a specific date in the future.
– Difference Between
This is important, because large investors and institutions heavily rely upon derivatives as well as futures for their trading needs. While futures are great for settling the agreement of price for a specific commodity real time, derivatives offer investors ways to hedge against the market or bet on volatility. Both of these financial instruments will open the doors to new money entering the space and driving Bitcoin closer to the moon than ever.
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