Editor's Note: This article comes fromNakamoto Shallot (ID: xcongapp), Author: Sister Xiaocong, published by Odaily with authorization.
Editor's Note: This article comes from
Nakamoto Shallot (ID: xcongapp)
Nakamoto Shallot (ID: xcongapp)
, Author: Sister Xiaocong, published by Odaily with authorization.
Will Bakkt 'kill' the Bitcoin bull market? BTC Plummets 20% After Bakkt Bitcoin Futures Launch, Now Options Are Coming…
Unlike Binance and other exchanges that focus on spot options, Bakkt launched Options on Futures this time, which means trading the right to buy and sell futures contracts, rather than the right to buy and sell spot goods.
One month after the launch of bitcoin physical delivery bitcoin futures, Bakkt once again stepped up its pace in the layout of the bitcoin derivatives market, taking the lead in occupying the options market. Earlier reports said that several sources with knowledge of Intercontinental Exchange's product roadmap revealed that Bakkt hopes to enter the bitcoin options business, and it hopes to beat rival Chicago Mercantile Exchange (CME).
Bakkt is a bitcoin futures platform under the Intercontinental Exchange (ICE). This product has been certified by the US Commodity Futures Trading Commission (CFTC) and is the "first regulated" option contract anchored to bitcoin futures. Bakkt will also gain the broad audience and high liquidity of the parent company. In addition, Bakkt will use ICE option analysis to provide option evaluation and help users analyze and control risks.
Bakkt adopts the European option model based on the Bakkt monthly bitcoin futures contract, and has a double settlement method of cash + physical. Kelly said that starting in January 2020, each option contract will cost $1.25 (1 contract = 1 bitcoin).
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Why launch Bitcoin options? what is it?
Bitcoin has only been born for more than ten years, and it has gone through decades of financial development in a very short period of time. Its financial transaction market structure has been rapidly fissioning. From over-the-counter transactions to both off-exchange and off-exchange transactions, and then to the prosperity of the Bitcoin futures contract market, Bitcoin may now usher in a full-scale explosion in the derivatives market.
This year, the entry of exchanges such as Bakkt, LedgerX, and ErisX has brought a new competitive landscape to the Bitcoin contract market. In addition, derivatives providers led by CME, Bakkt, and LedgerX are still exploring the huge unknown potential of the Bitcoin market, and The collective eyes turned to the Bitcoin options market.
As early as November 2017, LedgerX launched its first long-term trading bitcoin futures options (LEAPS), and according to Bloomberg, CME will launch bitcoin options in the first quarter of 2020, and is currently awaiting the approval of regulators. review.
Moreover, the current cryptocurrency spot market may be gradually becoming saturated, and it is not surprising that exchanges have collectively poured into the derivatives market. CoinGecko co-founder Bobby Ong said:
The spot market is also extremely competitive and filled with players with many differentiated products. Another reason why many exchanges are looking at the derivatives market is that there has not been much growth of new retail traders coming to the spot market. In order to maintain revenue/profits in a declining market, exchanges are forced to increase average revenue per user (ARPU) and can do this by offering margin and derivative products.
As the trading volume of Bakkt Bitcoin futures contracts gradually stabilized and went on the right track, the derivatives market became more and more worth looking forward to, so Bakkt acted quickly again.
So what exactly are Bitcoin options? How is it different from futures?
Xiao Cong's previous article "Bitcoin Options, the Exchange's Next Battlefield? "It is mentioned that options and futures belong to derivatives contracts. Options contracts give holders the right to buy or sell an asset at a fixed price on a specific date or at any time before that date; futures contracts are relative A trading method that spans time based on spot.
Futures trading is still a certain subject matter (it can be commodities/goods, such as gold, crude oil, agricultural products, or financial instruments, or Bitcoin), but it is not immediately traded, but traded at an agreed time in the future; And option trading is a right to buy and sell, but investors don't need to buy or sell real bitcoins.
In addition, the main benefits brought by Bitcoin options are similar to futures, such as:
1. Bring a large amount of emerging funds and flows to the cryptocurrency market, and provide more liquidity for the Bitcoin trading market.
2. It provides a federally regulated and compliant system for institutional and retail investors to purchase Bitcoin, and provides institutional investors with a stable and safe access to the cryptocurrency market.
3. Bakkt, CME, and LedgerX are all trusted entities with high credit or traditional authoritative financial endorsement, holding relevant licenses, and high security and legitimacy.
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But, will Bakkt "kill" the Bitcoin bull market?
There is currently a terrible conjecture that Bakkt, which is regarded as a "bull market engine", may "kill" the bull market, and CME and COBE are the precedents of Bakkt.
On December 11, 2017, during the frenzy period of the global bitcoin market, Dongfeng CBOE launched the world's first bitcoin futures contract (XBT), and bitcoin officially entered the public eye as futures. Immediately afterwards, the Chicago Mercantile Exchange (CME) also launched a Bitcoin futures contract (BTC) on December 18 of the same year.
The cryptocurrency market has begun to embrace institutional investors and large funds. CBOE and CME have provided a regulatory-compliant trading environment for the digital currency market, and are also considered a watershed in the legality of cryptocurrency.
However, CBOE and CME were also accused of being "bull market killers". On the day CBOE launched bitcoin futures, the price of bitcoin rose sharply again to around $16,700. On December 17, the day before CME launched bitcoin futures, bitcoin rose to an all-time high of nearly $20,000. Then it quickly ushered in a sharp drop and a bear market in 2018. At the beginning of 2018, Bitcoin fell to a minimum of around $3,000, a plunge of more than 80%.
Shallot’s latest article “Is the U.S. government to blame for the 2018 Bitcoin crash? According to the report, Christopher Giancarlo, the former chairman of the CFTC, said in an interview with CoinDesk:
An untold story of the past few years is that the CFTC, Treasury, SEC and then (National Economic Council) Director Gary Cohn believed that the launch of Bitcoin futures would burst the Bitcoin bubble. (and) it worked.
Giancarlo cited a study by the San Francisco Federal Reserve that argued that the launch of bitcoin futures has curbed a market dominated by optimists.
