There's been plenty of talk about the entrance of Bakkt and Nasdaq into the cryptocurrency space next year. If it feels a little like deja vu, that could be because around the same time last year, the industry was anxiously awaiting the first US-regulated Bitcoin futures exchanges in the form of CME and CBOE.
Sadly, all that institutional money that would finally make its way into crypto and lead to mass adoption failed to materialize. These regulated futures exchanges (that are reporting very nice trading volumes ) failed to be the kickstart to SEC-approved Bitcoin ETFs. And 2018 as the year of regulation is still distinctly TBD.
Speculation may have pumped the price even higher at the end of last year but that was before a massive drop that spurred an icy crypto winter.
So, after bitcoin futures failed to be the Holy Grail of institutional investment that crypto was seeking, what's different about Nasdaq and Bakkt? Why are insiders quietly optimistic despite the worsening bloodbath? What will they offer that hasn't come from CME and CBOE, and how about other players on the scene?
Let's take a look at how Bitcoin futures exchanges in 2019 are different--and may shape the industry in the year ahead.
There's a number of cool things about Bakkt that allow downtrodden crypto investors a much-needed dosage of hopium. Firstly, it's "backed" by some significant names. Not only are financial institutions and major VC firms like Pantera Capital behind the NYSE parent company's brainchild; but major household names like Starbucks are on board as well.
Beyond all the PR fluff though is the fact that Bakkt's flagship product will be a US-based one-day "physically delivered" Bitcoin futures contract. This is very different from the current offering from CME and CBOE that are cash-settled.
And what that means is that institutions have to invest in actual bitcoin to trade on Bakkt in the first place. This could be a shot in the arm to the crypto community that has so far seen little benefit from futures traders that never needed to invest in bitcoin to profit on its falling price.
Rumors of Nasdaq entering the bitcoin futures market were rife and they were unconfirmed until December 3 when the Express lead with the story. Nasdaq is planning on entering the market as well with Bitcoin futures trading in the first quarter of next year.
It's not yet clear whether the contracts will be physically settled (placing it in competition with Bakkt) or cash-settled to rival CME and CBOE. But either way, it's another vote of confidence--the big players are betting on Bitcoin's future.
What About the Retail Investors?
While Nasdaq and Bakkt may, at last, be the bridge for institutional money to cross over, where does that leave the retail investors? Apart from with the hope of the price going up? (And it is just a hope since the markets have failed to rally on either announcement of Bakkt or Nasdaq. In fact, Wall Street companies like ICE are famous for manipulating the markets and institutional investors may not get in until Bitcoin is circling the drain).
This is where the launch of a smaller bitcoin futures exchange designed especially for retail traders has the edge. Digitex Futures Beta version is launching on January 15. Unlike the institutions, this company is going after the little guy; the high-frequency, low-volume trader and short-term scalper who can grind out a daily living on the platform.
And with already the biggest group on Telegram and over 600,000 people signed up to its early access waitlist, Digitex is showing that demand for commission-free, low barrier, one-click futures trading is high.
Just like CME, Digitex contracts are cash-settled, but unlike CME, that doesn't quite have the same meaning. Every trader in the Digitex platform must purchase the exchange's native coin DGTX to place trades. So traders will speculate on the price of BTC, LTC, and ETH and the contracts will be settled in DGTX.
This means that traders still have to invest in bitcoin or ethereum as that's the only way they can buy DGTX. Since DGTX is in constant demand (you need it for all actions on the exchange) demand is constant and commission fees remain obsolete.
Unlike a huge player like Bakkt or Nasdaq, Digitex's market is individual traders, even novice traders, who want to learn a different strategy and make their virtual cash work for them--even if the bear market endures.
So, while Bakkt and Nasdaq are taking the lion's share of the water cooler talk, Digitex is grabbing the popular vote--600k+ and going strong.
When the exchange opens its doors in less than a month, and Bakkt starts trading on January 24, the markets will surely react. These three futures exchanges unlike those before them could just be the catalyst to jump-starting crypto that we've all been waiting for.