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Bakkt concludes merger; All set to become a Publicly traded firm

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Bakkt LLC, the prominent digital exchange marketplace has announced the completion of the merger with VPC Impact Acquisition Holdings [VIH]. The move would help the platform to transition into a publicly listed firm from October 18 this year. Along the same lines, the founding company, Intercontinental Exchange [ICE], revealed that the latest announcement would enable Bakkt holdings to trade publicly under the token name, ‘BKKT’ in the New York Stock Exchange [NYSE].

The official press release further revealed that ICE, which happens to be a global platform for data services and technology solutions, currently retains an astonishing 68% equity stake and a minor fraction of the voting power in the merged entities. Additionally, the financial stake will be regrouped as an equity-based investment and hence would not be incorporated in the ICE’s balance sheets. The resultant proceeds which are expected to generate at least $447 million, would not be included as well in the firm’s revised non-GAAP earnings as per the press release.

The development comes a month after the digital exchange foundation and VPC Impact Acquisition holdings had announced the intention to integrate and unite to form a single public traded entity. Following the request, the US-based regulator Security and Exchange Commission [SEC] finally approved the merger and set the stage for Bakkt holdings, initiating a new chapter in the company’s three-year-old history.

Bakkt’s previous partnerships

Earlier this month, the exchange joined hands with search engine giant Google to expand its reach and bring crypto-assets across a widely targeted audience in the United States and facilitate customers with faster digital transactions. This includes developing new analytics tools such as Artificial Intelligence [AI], Machine learning [ML], and Geolocation function, using Google Cloud’s innovative service to understand users’ individual preferences and demands and accordingly customize loyalty redemption packages.

In a recent development, the Georgia-based firm partnered with Finastra, a financial services-based open digital platform to grant access to Bakkt’s wallets and other use cases to the latter’s community bank customers and other credit unions under the ambit of Fusion Digital Banking solution. Reacting to the collaboration, Phillip Taliaferro of Bakkt stated

“Finastra’s clients are constantly seeking new and innovative experiences to drive engagement with their end consumers. Bakkt’s robust digital marketplace meets those demands by seamlessly integrating crypto, cash management, money transfer and wallet capabilities into Finastra’s FusionFabric.cloud platform and marketplace.”

Bakkt inks partnership with Google: More Details

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Google has announced joining hands with the digital exchange marketplace Bakkt to facilitate crypto-asset transactions into its network. The partnership will enable Bakkt consumers to integrate their digital cards with Google Pay for purchasing goods both online and in stores, as well as on any Google Pay-accepted platform. To process the payment, crypto-assets such as Bitcoin [BTC] will be converted into their respective fiat currencies.

According to the official blog post, Bakkt will utilize Google Cloud’s services to expand its reach across institutions and retailers in the United States as well as boost the usability of digital assets to cater to the growing and evolving consumer demand and preferences.

CEO of Bakkt, Gavin Michael said,

“This partnership is a testament to Bakkt’s strong position in the digital asset marketplace, to empower consumers to enjoy their digital assets in a real-time, secure, reliable manner. Additionally, partnering with Google Cloud will enable us to continue to build a best-in-class, innovative platform that can undoubtedly scale to meet the needs of millions of users.”

After the partnership announcement, Google Cloud President Kirstein Kliphouse noted that the move will utilize the natural synergy between the two companies in terms of scalability and technology. Furthermore, Bakkt in addition to Artificial Intelligence [AI], Machine learning [ML], and geolocation function, aims to develop a new analytics tool to gain location-specific key business information powered by the Google cloud. The aforementioned information will provide crucial business insights into their consumer’s psychology and help curate user-specific loyalty redemption packages.

Bakkt to go public ideally this month

Bakkt was founded in 2018 by Intercontinental Exchange, a subsidiary of the New York Stock Exchange [NYSE] as a cold storage provider of Bitcoin. The main purpose of its inception was to allow institutional players and market participants to purchase, sell, store as well as spend cryptocurrency and digital assets in a regulated environment.

Earlier in September this year, Bakkt foundation and VPC Impact Acquisition holdings had broken the news to merge and become a single public traded company. On September 18, this year US security and Exchange Commission [SEC] approved the merger and paved the way to operate as a publicly owned firm.

TronWeekly had also reported about the firm managing to fetch the 26th BitLicense from New York in March 2021. The development was significant as the state of NY has been known to be not precisely crypto-friendly.

Bakkt Manages To Score BitLicense From The State Of New York

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New York, has been a tough nut to crack for cryptocurrency platforms. Bakkt, however, seems to have cracked this by securing the BitLicense.

Several crypto firms across the globe have been leaving the United States due to the uncertain regulatory clarity in the country. Ripple’s latest fallout with the Securities and Exchange Commission of the United States was a major setback for the platform. Bakkt seemed to have made it to the good books of the New York government.

Bakkt Secures The 29th BitLicense

Bakkt created a stir after it rolled out its crypto derivative platform. More recently, the New York Department of Financial Services through a press release announced that the crypto platform was given a license permitting it to offer its services to the citizens of New York.

Linda A. Lacewell, the Financial Services Superintendent who carried out the announcement and suggested that the state was trying to keep up with the emerging wave of digitalization. She added,

“With new technology advancing every day, DFS is proud to be at the forefront of financial innovation through our continuous efforts to set the conditions for virtual currency companies to germinate and grow. Responsible innovation will blaze a path to a brighter future. This approval provides additional virtual currency options to New Yorkers as the state continues to rebuild and recover.”  

The state announced that Bakkt was the 29th platform to secure the license. Paxos was the first firm to receive this license back in 2015.

Bitcoin as well as other currencies with their impeccable price change over the last couple of months have managed to lure in several institutional investors. While the crypto community believes that BTC would record an upward trajectory, hereafter, governments across the globe have started to be more accepting of the crypto-verse. New York seems to be following the same with its latest announcement.

Bitcoin Futures Open Interest Skyrockets To $13B; CME Tops Chart

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Bitcoin continued to break new records as it oscillated back and forth a little below $40k. Following the price recovery in the spot market, optimism was also noted across the derivatives sector.

According to the latest stats compiled by Skew Analytics’ data dashboard, aggregated open interest [OI] in Bitcoin futures across the 12 biggest cryptocurrency exchanges surpassed a whopping $13 billion.

With this, OI hit a fresh ATH yet again on the 14th of January as interest in the market continued to soar high.

CME Tops The Chart For Bitcoin Futures OI

Skew
Bitcoin Futures Open Interest Skyrockets To $13B; CME Tops Chart 3

Out of the total OI figure, CME Group’s bitcoin futures accounted for $2.39 billion as the platform continued to soar in popularity as more institutional investors flock to the sector.

CME was followed by OKEx with $2.08 billion, Binance with $2.05, and Huobi with $1.04 billion. The once leading derivatives giant BitMEX was in the 8th position on the Skew charts amassing an OI of $0.88 billion.

Unlike CME which went on to become the largest market for Bitcoin Futures, ICE’s crypto venture, Bakkt has been laying low in terms of the OI numbers recording a mere $0.05 billion on the same day.

Skew2
Bitcoin Futures Open Interest Skyrockets To $13B; CME Tops Chart 4

The latest news comes after a large liquidation event following the biggest price dump of the year. Despite more than $1 billion buy liquidation, the appetite of the futures contract trades appeared to be bullish as depicted by the OI figures. It was clear that the impact of the recent liquidations was in no match for the bullish outlook among the market participants.

Optimism From Professional Traders: Strong Bullish Projection For Bitcoin

The above charts also evidenced more and more inflow of money into the market, as traders expect a near-term rise in the crypto-asset’s volatility which was indeed a positive development for its spot price. Noting the rising optimism, prominent analyst Joseph Young tweeted,

“Bitcoin futures open interest is back to an all-time high once again. Open interest = the sum of all futures contracts in the market. When the market crowded, massive price swings like the Jan. 12 20% drop become more likely. Another flush drop above $42k could happen again.”

Bakkt Reportedly Intends To Go Public With $2 Billion Merger

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Back in 2019, the Intercontinental Exchange [ICE] rolled out Bitcoin derivative services that included futures and options through Bakkt. The cryptocurrency exchange saw immense traction back in the day and is reportedly prepping to go public.

Bakkt To Team Up With VPC Impact Acquisition Holdings

Over the course of the last two years, Bakkt made it to the headlines for various reasons. Starting with the launch of its Bitcoin futures platform all the way to Mike Blandina, the CEO of the firm bidding adieu to the crypto platform for JPMorgan, the platform is back in the headlines as rumors of the firm going public surfaced in the industry.

The platform has managed to stay relevant and its application is substantial proof of the same. Bakkt’s app allows users to keep their virtual assets in check while receiving loyal points as well as gift cards.

Bloomberg, in a recent report, revealed that Bakkt was in “advanced talks” with VPC Impact Acquisition Holdings, a black check firm. As told by an anonymous source, the crypto platform will reportedly engage in a merger with the aforementioned company in order to go public. The sources familiar with the matter further affirmed that an announcement about the same would be made as early as next week. The value of the transaction of both these platforms could sum up to a whopping $2 billion.

Furthermore, ICE’s crypto venture is signing the merger deal with VPC, a company intimately associated with Victory Park Capital which acquired the former under SPAC aka special purpose acquisition company. While the crypto exchange hasn’t affirmed its intention of going public, yet, the rumors about the same continue to prevail.

Additionally, Kelly Loeffler, the former CEO of Bakkt was seen resigning from the Georgia Senate re-election bid. Loeffler took to Twitter to congratulate Reverend Raphael Warnock while apologizing to those who supported her campaign. The tweet read,

She said,

“Unfortunately, we came up slightly short in the runoff election, and earlier today I called Reverend Warnock to congratulate him and wish him well in serving this great state.”

Bakkt Bitcoin Futures Records 36% Increase In Daily Volume Since Previous ATH

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Bitcoin Futures, have managed to amass immense traction across the globe. While several platforms have begun exploring the prospects of Bitcoin Futures, the existing ones continue to score big. Prominent crypto asset custody platform, Bakkt recently revealed that it had quashed its own record for Bitcoin Futures Trading Volume.

Still Behind CME

Intercontinental Exchange’s [ICE] crypto derivatives platform, Bakkt, revealed on Twitter that it had recorded a new high in Bitcoin Futures volume. The platform nearly accumulated a total volume of $200 million surpassing its previous record by 36%. The tweet read,

“Another record day in the books for our physically delivered futures:

15,955 Bakkt Bitcoin Futures were traded today, representing over $200M of volume and a 36% increase from our previous all-time high”

Bakkt’s previous all-time high was about $125 million, where a total of 11,706 Bitcoin Futures were traded on 28 July 2020.

EiBXI0aWoAEhVSs scaled

Back when ICE announced the launch of Bakkt, challenging the already well established Chicago Mercantile Exchange [CME], the fervor around the project left the crypto community with high expectations for the project. Even though investors considered Bakkt as a catalyst for Bitcoin’s potential bull runs, the platform did not spiral as expected. Bakkt witnessed dainty gains compared to other projects. The latest instance substantial proof of the same.

Today, as Bakkt recorded its latest all-time high of $200 million in volume, CME went on to bag $262 million in volume. The highest Bitcoin Futures volume, CME has recorded was about $1.1 billion. The disparity between these two platforms questions the “competitor” tag that they have been given.

CME wasn’t the only platform that overtook Bakkt, prominent cryptocurrency exchanges like Binance, Huobi as well as OKEx were seen recording increased value. Malta-based Binance recorded trade worth, $2.65 billion over the last 24-hours for BTC-USD perpetual contracts. Huobi garnered a total of $1.28 billion via its BTC/USD perpetual contract.

Crypto Derivatives Volume Soar to Fresh ATH in August; Catalyzed by Bitcoin’s Rally Above $12,000

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While the lack of positive jurisdiction may have driven the cryptocurrency industry into a gray area, but the derivatives sector has come to the rescue. It has undoubtedly driven a new cycle of crypto adoption.

The crypto industry has seen developments on various fronts and thanks to the foray of many institutional investors, space has matured significantly from narratives such as ‘Wild West’ or another ‘dot-com bubble’.

Over the past few years, crypto derivatives have played an important role and this was evident in its soaring trading volumes. According to the latest Exchange Review report by CryptoCompare, derivatives volume has soared to a fresh all-time high in August.

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Trading volumes of derivatives surged by a staggering 53.6% in August driving the figures to a massive $711.7 billion. With this, the trading volume surpassed the previous high of May when it registered $602 billion in monthly volumes.

Along with the derivatives, volumes for spot also increased by 49.6% taking its figures to $944.9 billion in August. Interestingly, this month saw a period of high volatility coupled with Bitcoin’s price movement climbing to the 2020-peak above $12,300. This could have potentially triggered the surge of trading volume as trading activity in derivatives as well as their underlying cryptocurrencies intensified.

This was a promising sign of the market maturing as institutional investors remained overall optimistic despite several pullbacks.

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Besides, derivatives exchanges also saw a significant increase in trading volume in August, according to the report. Huobi dominated the chart with a trading volume of $208.5 billion after rose by 44.7%.

Next in the line was OKEx, which was up by 69.1% and reported a volume of $190.8 billion following Binance with $184.6 billion volume traded after surging by 74% in August. In addition, BitMEX traded $72.5 billion and registered an increase of 43.6%.

The report further noted,

“Trading activity remained high in August compared to July. The top 4 exchanges Huobi, OKEx, Binance and BitMEX represented 90% of the volume traded throughout the month.”

Monthly CME futures contract volumes have also noted a substantial uptick of 36.3% since July as it touched 203,867 contracts traded in August. Additionally, another institutional investing platform, Bakkt recently surpassed its highest-ever figure of $147 million in volume with 12,791 contracts traded on 25th August as previously reported by TWJ.

Bakkt Volume Smashes Previous Record, Hits New ATH at $147 Million

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Almost a month after breaking its record twice in two consecutive days, volumes on Bitcoin futures offered by Intercontinental Exchange [ICE] subsidiary, Bakkt, hit yet another milestone.

The institutional investing platform registered its highest-ever figure of $147 million in volume with 12,791 contracts traded on 25th August, as per the data from the crypto-analytic site, Skew. As compared to its previous high in July for Bitcoin’s monthly futures, Bakkt’s figures were up by 15%.

skew bakkt bitcoin futures total open interest volumes 1

On the other hand, the open interest [OI], which is an indicator of the total number of outstanding contracts held by investors, declined and was found to be at $9.5 million. This may be due to the fact that the latest move followed a correction in the underlying asset price that plunged to $11,397 as opposed to its previous high, which was driven by Bitcoin breaking the almost three-month range-bound trading channel.

Bakkt’s physically-settled contracts which are paid out in BTC registered a volume of $134 million while its cash-settled contracts, which are delivered in US Dollars, accounted for $13 million.

However, New York Stock Exchange-owned Bakkt wasn’t the only institutional exchange that recorded a new peak. Its rival, Chicago Mercantile Exchange [CME] also saw nearly a month-high surging to a volume of $935 million while its open interest was found to be at $713 million, according to data from Skew Analytics.

skew cme bitcoin futures total open interest volumes

Leading cryptocurrency exchange and derivative platform, OKEx‘s ‘BTC Top trader sentiment index’ also spiked to 0.59 as volumes rose to $4.5 billion despite a low open interest. However, these figures were still negligible when compared in a macro aspect of the derivatives market.

The aggregated daily volume of the collective derivatives platform, as noted by Skew, suffered from poor figures in August. It continued to remain below $20 billion for the most part of the month since the underlying asset’s price sustained major corrections and failed to breach $12,000 despite multiple breakout attempts.

However, with the latest surge, the aggregated daily volume also rose, though not significantly, to $17 billion, a level that was last seen on 19th August when Bitcoin’s price soared to $12,278. Could this spur a rally for Bitcoin in the near-term?

Over $4.3 Billion in Bitcoin, Ethereum Options Was Clocked in July 2020

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The last 7 days in July was extremely positive for the price values of Bitcoin and Ethereum, as both virtual currencies improved by 23 and 45 per cent respectively. Ethereum has moved above $400 to its highest point in 2020 and the overall improvement in the ecosystem has had an impact on Deribit’s options market.

Deribit released its Institutional Newsletter recently and the derivatives exchange expressed that July was one of the best months in 2020 from an options volume.

bitcoin and ethereum

According to the newsletter, the total options volume resulted during the previous month eclipsed everything in the past, as the total turnover clocked in at a whopping $4.3 billion. It was a massive 52 percent jumped from June 2020 for Deribit.

Official numbers indicated that 380,804 BTC options contracts were traded, rising by 44% versus June 2020 and for Ethereum options, the number clocked in was around 1,878,361 contracts; spiking by 41% since June 2020.

The report further added,

“The total Options OI on Deribit was up 37% vs. June, with an impressive 90% growth in ETH. However, BTC growth did not slow down either, increasing by 31% vs. Q2 expiry. Altogether a new Options OI record was reached with more than USD 2.01 billion worth of contracts open right before the expiry.”

In terms of total turnover from USD development, over $10.7 billion in July was witnessed jumping by 17% from June 2020.

The relative improvement of the derivatives market is a prime example of the improving interest in the crypto market. Traditional traders and accredited investors were getting drawn towards investment products involving Bitcoin and Ethereum, in order to gain substantial exposure.

However, Bakkt’s Bitcoin exchange did not have the same fruitful experience in July 2020.

Bakkt Bitcoin Contracts dropped from 221 to 58

According to a recent Arcane Research tweet, the number of Bakkt Bitcoin futures contracts that were held in July crashed about 75% in July, which was the lowest amount recorded throughout 2020.

bakkt btc

The above chart illustrated that the number of Bakkt bitcoin delivery contracts declined from 221 in June to a lowly 58 in July. June was extremely positive for Bakkt hence this comes across as a major setback for the ICE backed exchange.

bakkt bitcoin futures

However, in spite of misfortunes the previous month, It is evident from Skew data that Bakkt’s Open-Interest is currently at an all-time high range of $25 million, which suggested that institutional investors were continuing to flood in the regulated exchange.

Bitcoin Bakkt Futures Settles 11,706 BTC; CME Reaches an OI of $726 million

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The domino effect in play for Bitcoin seems to be in full throttle.

After bitcoin surpassed its yearly high in February, the largest digital asset created a ripple effect in multiple directions. With on-chain fundamentals improving in the charts, Bitcoin’s derivatives market was incurring major change as well.

CME and Bakkt have been two of the most important exchanges for Bitcoin that have promoted the involvement of institutional investors in the digital asset space.

Many believed that Bitcoin’s next major bullish rally would emerge from the participation of accredited investors, and according to recent developments, things are likely to move in that direction at the moment.

skew bakkt bitcoin futures total open interest volumes

According to Skew analysis, Bakkt futures reportedly recorded its highest BTC physically-settled contracts, amassing a whopping 11,705 futures on 29th July. The futures contracts were valued at over $125 million. The platform that is backed by Intercontinental Exchange, announced on Twitter,

Now alongside Bakkt, CME was registering a heightened level of activity on its platform as well.

According to data, the Open-Interest in CME cash-settled Bitcoin futures surpassed its previous all-time high with a massive surge of up to $724 million.

skew cme bitcoin futures total open interest volumes

At illustrated in the above chart, the OI on the CME platform witnessed a huge spike over the past 48-hours which led to the exchange passing its previous high of  $530 million.

CME’s high open-interest is currently accompanied by an average daily volume of $308 million as compared to $285 million witnessed in the month of June. Although, the daily volume had spiked up to $1.7 billion in the charts during the Open-Interest rally.

Implied Volatility spikes after consistent lows

skew btcusd iv vs rv

One of the surprising trends consistent throughout the year has been Bitcoin’s volatility. Despite a high level of activity in February, April-May, and now in July, volatility has been under the radar. Bitcoin’s volatility has been so low that other traditional stocks appeared to be more volatile in nature than Bitcoin.

However, the recent spike is creating a bit of a change. Bitcoin’s Implied and Realized Volatility, both underwent a minor spike during the recent rally. Both the volatility levels had recently registered their yearly-low at 3.1% and 3.0% respectively, so it will probably take a while before it reaches previous high levels.

Low volatility levels are a positive sign from a long-term perspective as they indicate the maturity of an asset.