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In the middle of the night on August 16th, Beijing time, Bakkt, a digital token futures platform affiliated to the Intercontinental Exchange Group (ICE), published an article on its official blog saying that it has been approved by the New York State Department of Financial Services (NYDFS), and will be launched on September 23rd. Officially launched the BTC futures contract. This is also the world's first physically delivered BTC futures contract, providing institutional investors with a legally compliant, safe and convenient way to invest in BTC.
Summary
Summary
Topic: Contract regular army Bakkt, leek savior or harvester? Bakkt belongs to the Intercontinental Exchange Group (ICE), the parent company of the New York Stock Exchange, and has the blood of traditional finance. At present, Bakkt has obtained the New York State Trust License from the New York State Department of Financial Services, and established a compliance custodian, Bakkt Trust Company, to provide custody services for physically delivered BTC futures contracts. Bakkt claims that it is not a trading platform itself, and its core services are "secure and compliant custody business" and "institutional-level transaction settlement". Bakkt's contract products are divided into daily contracts and monthly contracts, but its competitors should not be underestimated. The advantage of Bakkt is to solve the problems that institutional investors pay more attention to such as lack of liquidity, poor market depth, lack of price discovery mechanism, loose supervision and KYC, and poor reliability in traditional futures exchanges. Bakkt's long-term vision is to open up an ecological closed loop from spot and futures trading to digital token payment. The launch of physical settlement contracts is also good for BTC.
Market: The rebound is blocked, and the support is stepped back. The total market value of digital tokens this week was US$270.74 billion, a decrease of US$34.42 billion or 11.3% compared to last week. The average daily turnover was US$56.87 billion, down 4.0% from last week, and the average daily turnover rate was 20.2%. The current price of BTC is 10374.3 US dollars, a weekly decline of 12.5%; the average daily trading volume is 18.2 billion US dollars. The current price of ETH is 185.4 US dollars, with a weekly decline of 11.9%; the average daily trading volume is 6.78 billion US dollars. This week, the BTC balance on the exchange was 886,000, an increase of 4,870 from last week; the ETH balance was 9.193 million, an increase of 10,000 from last week. In the BICS secondary industry, the market value of payment and settlement and the number of tokens have declined.
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Risk warning: market volatility risk
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1 Topic: Contract regular army Bakkt, leek savior or harvester?
In the middle of the night on August 16th, Beijing time, Bakkt, a digital token futures platform affiliated to the Intercontinental Exchange Group (ICE), published an article on its official blog saying that it has been approved by the New York State Department of Financial Services (NYDFS), and will be launched on September 23rd. Officially launched the BTC futures contract. This is also the world's first physically delivered BTC futures contract, providing institutional investors with a legally compliant, safe and convenient way to invest in BTC.
1.1 Bakkt's Past and Present
Since the birth of BTC, enthusiasts and practitioners of digital tokens have never stopped trying to make digital tokens enter the mainstream public view. What compliant trading platforms such as Bakkt and Coinbase have done is to guide traditional institutional investors to invest in BTC, etc. digital token. On the one hand, the funds of institutional investors can inject a large amount of liquidity into the market; on the other hand, the entry of traditional institutions makes it easier for digital tokens to enter the public eye, and it also forces regulators to re-enact digital token-related regulations.
In August 2018, Intercontinental Exchange Group, the parent company of the New York Stock Exchange (NYSE), announced that it would use Microsoft Azure cloud services to "build an open and compliant global digital asset ecosystem" and establish a subsidiary, Bakkt. Its partners include Starbucks, Boston Consulting and other well-known enterprises. Bakkt's goal is to enable individual and institutional customers to seamlessly buy, sell, store and consume digital assets, bringing trust, efficiency and commercialization to digital assets. Bakkt's attempt to enter the digital asset field started with futures trading and digital asset custody. Its ambition is to establish a comprehensive blockchain infrastructure for institutional investors and create a complete digital token payment system.
Bakkt was established in the cold winter of the blockchain secondary market, but it has an investment that is the envy of the industry and even the entire financial world. As a subsidiary of ICE, Bakkt easily obtained 12 institutions and follow-up investors from Boston Consulting, Li Ka-shing's Horizons Investment, Microsoft Ventures M12, the FinTech department of the South African newspaper group, Galaxy Digital, Protocol Ventures, and Pantera 1.825 billion dollars in financing. Among them, Horizon Ventures is an investor in technology companies such as Facebook, Skype, and BitPay. The South African Press Group is the largest shareholder of Tencent. There are also top blockchain venture capitals among other investment institutions.
The candidates for Bakkt's management team are also highly valued by ICE. Bakkt CEO Kelly Loeffler is the wife of ICE CEO Jeff Sprecher and a veteran employee involved in ICE's acquisition of the New York Stock Exchange and ICE's IPO. Most of the other managers are from well-known blockchain companies such as Coinbase and Digital Asset Research.
Bakkt's road to compliance has not been smooth. At launch, Bakkt had targeted a December 2018 launch, but due to “continued work with regulators to obtain the necessary approvals,” Bakkt announced that it would extend the launch indefinitely. In 2019, with the gradual recovery of the secondary market, Bakkt also started testing its new futures contracts as planned, and the cooperation with regulators is also continuing. The current compliance status of Bakkt's main products is as follows.
Bakkt futures contract user acceptance testing has been approved by the US Commodity Futures Commission (CFTC) and successfully launched. Bakkt has obtained the New York State Trust License from the New York State Department of Financial Services, and established a compliance custodian, Bakkt Trust Company (Bakkt Trust Company), to provide custody services for physically delivered BTC futures contracts.
1.2 The core business of Bakkt is custody, and the contract is divided into daily and monthly
Bakkt claims that it is not a trading platform itself, and its core services are "secure and compliant custody business" and "institutional-level transaction settlement". Bakkt will use the existing infrastructure of the parent company ICE, which will conduct transaction matching and clearing. Bakkt will provide token custody services for physically-cleared BTC contracts through BakktWarehouse, a trust product with independent governance and strict security protection measures.
At present, there are two main contract products of Bakkt: daily contract and monthly contract. According to the Bakkt CEO, daily settlement contracts will be traded on margin, providing an alternative to unregulated spot exchanges. Monthly contracts can provide price expectations for each month in the next year, and investors can conduct arbitrage, hedging and other transactions.
The benchmark price of Bakkt contracts is not dependent on unregulated spot exchanges. Bakkt has a series of measures to prevent false transactions, malicious transactions and other behaviors that may destabilize the market. It adopts the same risk control standards as ICE's gold, crude oil, and stock index futures, which is more professional and safer than other futures exchanges.
1.3 The Red Sea market of digital token futures contracts is fiercely competitive
It has been nearly ten years since the birth of BTC, and the trading volume of the digital token secondary market has experienced explosive growth. In addition to spot exchanges, futures also account for a large portion of the total trading volume.
There are two ways to deliver futures contracts: cash delivery and physical delivery. At present, digital token futures contracts on the market, such as BitMEX, OKEX contracts, Huobi DM contracts, CBOE and CME BTC futures contracts, etc., all use cash delivery. This is because cash delivery does not involve the custody and delivery of BTC physical objects, so that it can To avoid a series of regulatory issues such as KYC and anti-money laundering, it is favored by spot exchanges and traditional financial institutions when they launch market-opening products.
Physically delivered futures contracts involve the custody, trading and clearing of digital tokens. According to the relevant regulatory requirements of the United States, companies with a DCO (Derivatives Clearing Organization License) license can conduct custody business, and companies with a DCM license can conduct liquidation business. Contract products with higher entry threshold than cash settlement. Bakkt obtained the license through the acquisition of DACC, a digital asset custody company with a DCO license, and is expected to obtain a DCM license before it is officially launched.
Bakkt's main competitors include:
ErisX: Owns DCM and DCO licenses. Shareholders include CBOE, Bitmain, Fidelity Investments, Nasdaq Venture Capital, Monex Group, PenteraCapital, etc. Its main product is BTC contracts for physical delivery.
LedgerX: It also has DCM and DCO licenses. Shareholders include Digital Finance Group, Miami International Holdings, Blockchain Capital, etc. Its main product is BTC contracts for physical delivery.
Other cash-delivered futures exchanges such as CME, BitMEX, etc. Their products were released earlier and currently have a certain market share. Compared with the existing digital token exchanges with futures contract business, Bakkt's advantage is that it is tailor-made for institutional investors.
Bakkt focuses on solving the problems that institutional investors pay more attention to, such as lack of liquidity, poor market depth, lack of price discovery mechanism, lax supervision and KYC, and poor reliability in traditional futures exchanges. On July 19, BitMEX was under investigation by the U.S. Commodity Futures Trading Commission for allowing U.S. citizens to trade BTC futures on its platform and other KYC issues, which triggered a large amount of capital flight from the exchange; There are violent fluctuations in the market), the phenomenon of liquidation and allocation, and early liquidation have been criticized by investors. The launch of Bakkt may improve these problems.
1.4 One small step for Bakkt, one giant leap for blockchain
Bakkt's adoption of physical delivery may benefit BTC in the long run. The delivery contract can obtain physical BTC instead of fiat currency for settlement, which makes the settlement of the contract more efficient than the decentralized stable pass or the traditional bank payment and settlement system; on the other hand, Bakkt users must have a certain amount of BTC as a margin for holding positions In the short term, it will stimulate the demand for BTC in the market. In the long run, there may be more digital token contract products for physical settlement, which may push the price of BTC up.
Bakkt's vision not only includes futures contracts, but also opens up an ecological closed loop from spot and futures trading to digital token payment. According to the blockchain media The Block, Bakkt will launch a mobile payment application called Bakkt Pay, and hired Google payment product expert Chris Petersen to be responsible for the development of this application.
Starbucks will be one of Bakkt Pay's key partners. In addition, Microsoft, AT&T, department store chain Nordstrom and game retailer GameStop are also likely to participate in the Bakkt Pay project. The futures contract launched by Bakkt is just a small step, but it is a big step in the compliance and institutionalization of the digital token market. Bakkt may increase mainstream society's recognition of digital tokens. In the future, people may be able to use the profits of the Bakkt contract to walk into Starbucks to buy a cup of coffee.
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2 Market: BTC's rebound encounters resistance, stepping back on support
2.1 The overall market: the rebound is blocked, and the support is stepped back
The total market value of digital tokens this week was US$270.74 billion, a decrease of US$34.42 billion or 11.3% compared to last week. Affected by factors such as the slight easing of Sino-US trade relations and the correction of gold, BTC led the digital token market to pull back sharply, stepping back on the support level near $9,500.
The average daily trading volume of the digital token market was US$56.87 billion, a decrease of 4.0% from last week, and the average daily turnover rate was 20.2%, an increase of 0.8% from last week. BTC's market value accounted for 68.5%, a slight drop.
The BTC balance on exchanges this week was 886,000, an increase of 4,870 from last week. The balance of ETH on the exchange was 9.193 million, an increase of 10,000 from last week. The balance of BTC and ETH on the exchange shows an increasing trend, indicating that the selling pressure on the market has intensified.
The USDT market cap is $4.053 billion, an increase of $15 million from last week. USDT premium rate is 0.2%. As the price of BTC fell, funds rekindled their willingness to enter the market.
2.2 Core tokens: BTC fell back, mainstream tokens fell heavily
The current price of BTC is 10374.3 US dollars, with a weekly decrease of 12.5% and a monthly increase of 7.0%. The average daily turnover of BTC this week was $18.2 billion, with an average daily turnover rate of 9.5%. BTC’s rebound this week encountered resistance and fell back, and it will fluctuate and consolidate at the position of 9,500 to 10,500 US dollars.
The current price of ETH is 185.4 US dollars, with a weekly decline of 11.9% and a monthly decline of 12.3%. This week, the average daily trading volume of ETH was 6.78 billion US dollars, and the average daily turnover rate was 31.8%. ETH hit a new low in nearly three months, and the selling pressure was heavy.
The current price of EOS is $3.59, with a weekly decline of 8.1% and a monthly decline of 6.6%. The average daily trading volume of EOS this week was US$1.63 billion, with an average daily turnover rate of 45.6%. The decline of EOS is slightly smaller than that of BTC and ETH, but the trading activity has declined, and it is already close to the previous low of $3.3.
The current price of XRP is $0.262, with a weekly decline of 11.9% and a monthly decline of 15.7%. The average daily trading volume of XRP this week was $1.1 billion, with an average daily turnover rate of 9.3%. The trend of XRP is weak and has fallen below the long-term support level, so it should be avoided in the short term.
The volatility of major tokens continued to drop this week. The monthly volatility of BTC was 19.8%, down 6.9% from last week; the monthly volatility of ETH was 19.5%, down 8.9% from last week; the monthly volatility of EOS was 24.6%, down 6.9% from last week It fell by 8.8% last week; XRP’s monthly volatility was 16.5%, down 3.0% from last week. The BTC shock range is gradually narrowing, and the triangle convergence trend is about to come to a change.
2.3 BICS industry: the market value of payment and settlement and the number of tokens have declined
Among the top five BICS (Blockchain Industry Classification Standard, Blockchain Industry Classification Standard) secondary industries by market capitalization, the market capitalization of the payment and settlement industry has decreased, from 76.4% to 75.8%. From the perspective of the change rate of market capitalization, performance optimization, project services, and stable token industries have a relatively high growth rate of market capitalization, which increased by 48.2%, 14.9%, and 13.6% respectively compared with last week; supply chain, non-bank finance, and medical care The proportion of health care market value decreased significantly, down 26.4%, 18.3% and 4.8% respectively from last week.
This week, the BICS secondary industry with a relatively obvious increase in the number of tokens serves the project, an increase of 3 compared with last week, and an increase of 2 stable tokens, data storage and other industries; the BICS secondary industries with a significant decline in the number of tokens are respectively Payment and settlement, leisure and entertainment, and communication services dropped by 5, 3, and 3 respectively compared with last week.
2.4 Market view: The mid-term consolidation may end, and there will be a change in early September
The long-term bull market will continue. In the long run, high-quality tokens have a lot of room for imagination. It is still in the early stage of the bull market, and callbacks are rare opportunities to increase positions. Investors can make asset allocation according to their own conditions.
The long-term bull market will continue. In the long run, high-quality tokens have a lot of room for imagination. It is still in the early stage of the bull market, and callbacks are rare opportunities to increase positions. Investors can make asset allocation according to their own conditions.
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3 Output and popularity: Difficulty and computing power remain stable, and public attention is low
This week, according to Google Trends, the search popularity of the term Bitcoin is 13, and the search popularity of Ethereum is 7, both of which are slightly lower than last week. Not much public attention.
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4 Industry News: Channels for Institutional Investment in Digital Tokens Continue to Expand
4.1 Central Bank Mu Changchun: The central bank’s digital currency will be launched soon and will adopt a two-tier operating system
On August 10, Mu Changchun, deputy director of the Payment and Settlement Department of the People's Bank of China, stated at the third China Finance Forty Forum that the central bank's digital currency will be launched soon and will adopt a two-tier operating system. The second floor is a commercial institution. The central bank will not presuppose a technical route, and any advanced technology may be used in the research and development of the central bank's digital currency; the boundary between electronic payment and the central bank's digital currency is blurred; market forces can be fully mobilized to achieve system optimization through competition.
4.2 SEC delays decision on three BTC ETF proposals until fall
The U.S. Securities and Exchange Commission (SEC) on Monday delayed a decision on three proposals for a BTC exchange-traded fund. Three proposals were made by Bitwise Asset Management, VanEck/SolidX and Wilshire Phoenix, respectively, and have been filed with NYSE Arca and CBOE BZX. There is a view that the SEC will never approve BTC ETFs, but this does not stop traditional institutions from investing in digital assets such as BTC.
4.3 Seed CX began testing physically settled BTC margin swaps and plans to launch within the next three months
Seed SEF, a subsidiary of digital token exchange Seed CX, has begun user acceptance testing of its physically-settled BTC margin swaps. Seed SEF revealed that testing will continue until August, and that successful test results will be announced, pending review by regulators. “We’re working closely with the CFTC and hope to have a public launch of the product within the next three months,” Edward Woodford, co-founder and CEO of Seed CX, told The Block. It’s a derivatives contract, usually on the sidelines Trade one financial instrument with customization features.
4.4 Bakkt plans to launch physically settled BTC futures contracts on September 23
