When the notion of Bakkt was first put forward, it was heralded as a potential game-changer. The long wait for regulatory clearance also helped further cement its place as a way for institutional money to flow into the Bitcoin ecosystem. However, since its launch, the uptake has been incredibly disappointing.
However, disappointment is pretty relative. In comparison to other Bitcoin future platforms, the volume from Bakkt is indeed way below its competitors. However, Bakkt is also offering something that has never been seen before – physically settled contracts.
For this reason, it has been said that the uptick will likely be gradual, but it is still one of the most bullish moves for institutional interest in Bitcoin. So, should we still be bullish on Bakkt, even though it is not taking off like expected?
Scott Melker, a cryptocurrency trader at TexasWest Capital and popular analyst on Twitter, told Longhash that “Bakkt allows institutional investors to safely gain exposure to BTC” and is thus “potentially extremely bullish.”
Melker’s comment was reminiscent of one made by Tom Lee, a well-known crypto commentator, and partner at Fundstrat. Three days out from Bakkt’s inaugural trading session, Lee wrote on Twitter that the exchange has the “ability to improve trust with institutions to crypto.”
The crux of the matter, however, seems to be the physically settled aspect still. Although totally regulated and well kept in custody and vaults, institutional investors are still a little coy to dive in and have direct access to Bitcoin.
Sasha Fleyshman, a trader at crypto investment management firm Arca, told LongHash:
“Bakkt hasn’t necessarily reinvented the wheel — CME Bitcoin futures already offer exposure to Bitcoin — but launching an institutional-grade custody solution for physical Bitcoin is a huge value add. This could make a huge difference for them in the long run.”
She also added: “Institutions are not known for moving fast and breaking things, and due diligence and on-boarding of these firms takes quite a bit of time.”
It is these kinds of discussions that mean it will make a lot more sense to determine the success of this platform in the coming years – rather than the past few weeks.