The Topic Every Investor Is Watching: Bakkt Exchange Explained in One Go

Hello! Today I'd like to talk about Bakkt, something any crypto investor has probably heard of at least once. If you're curious about what Bakkt is and how the market might change after its launch, this post should be a helpful read.

First of all, Bakkt isn't a specific product, as many people assume, but the name of a newly launching exchange. You might be wondering what makes it so different from existing exchanges that it keeps showing up in the news. The answer is that Bakkt lets you trade Bitcoin within a federally regulated, institutional framework, roughly on par with the New York Stock Exchange.

This is possible because Bakkt's parent company is Intercontinental Exchange. After CME, it's one of the largest exchanges in the world. Its operating income last year was reportedly around USD 4 billion. In other words, an exchange with deep pockets and plenty of talent is launching a brand-new Bitcoin exchange.

Naturally, this exchange will include futures trading. While the existing futures offered by CME and CBOE were based on US dollars rather than Bitcoin, Bakkt will offer Bitcoin-based futures. This means that, whereas before you could take a position without owning any Bitcoin, now you'll need actual Bitcoin, the 'spot' asset. So the structure naturally pulls more money into the crypto market. Bakkt's futures also shorten the contract period from the usual one month to a single day. And if a contract is settled, the Bitcoin in question is held as a physical asset in a digital asset custody facility.

So, will the price go up once Bakkt arrives? Not necessarily. An influx of institutions doesn't mean Bitcoin will simply rise (although, of course, the market may rebound in response to the good news); it means the market becomes more stable. After all, one of the main reasons Bitcoin ETFs have been rejected so far is market instability. So with Bakkt as a turning point, we can look forward to possible ETF approval down the road!

The problem is that nobody knows yet when this Bakkt will actually launch. That said, recent posts on Twitter about recruiting new staff suggest it might launch fairly soon.

Bakkt has a number of partners, but Starbucks looks set to lead the way among them. Starbucks has long shown a fairly friendly attitude toward cryptocurrency, and with the launch of Bakkt, it looks likely to take the lead in connecting Bitcoin and other cryptocurrencies to the real economy. Amid the current slump in the Bitcoin market, the launch of Bakkt is clearly good news in many ways.