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Bakkt Bitcoin Futures: Awaited, Debated . . . and Deflated? — The Ledger

September 25, 2019, 12:43 PM UTC

Slow start” … “rather anemic” … “fails to dazzle” … “tame launch” … “thin trading” … “disappointment” … “lackluster” … “limp.”

That’s how reporters and industry analysts described the Monday launch of Bakkt, the long-anticipated, long-delayed Bitcoin business devised by Intercontinental Exchange, parent of the New York Stock Exchange. Further dampening spirits: Bitcoin’s price dropped to $8,350 from above $10,000 amid the debut. Prices for other cryptocurrencies similarly dove across the board.

Needless to say, this wasn’t the coming-of-age party Bitcoin bulls had hoped for.

In their first 24-hours of trading, Bakkt’s new monthly and daily futures contracts, which allow investors to bet on the digital currency’s price movements, totaled just 73 contracts worth a Bitcoin apiece in volume. Some critics noted that, compared to the December 2017 debut of rival CME Group’s Bitcoin futures, which in their first 13 hours traded 751 contracts worth 5 Bitcoins apiece, Bakkt severely underwhelmed.

But there are key differences between the futures launches of Bakkt and CME. When CME’s hit the market, it was the height of Bitcoin mania. The digital currency’s price was reaching all time highs, nearing $20,000. Despite the seemingly unquenchable exuberance, even then, industry watchers were unimpressed with the uptake. (At the time, Reuters described the CME debut as “tepid” with a “muted reception.”)

Bakkt differs from CME in technical ways as well. Bakkt’s proposition—settling contracts with physical Bitcoin, rather than just cash payouts as CME does—has real potential to lift the credibility of cryptocurrency as an asset class. Bakkt’s infrastructure will likely become fundamental to reliable price discovery, smoothing out the curves where Bitcoin supply and demand intersect. Even if it takes a while to get going, one must respect the slog.

Michael Sonnenshein, managing director of Grayscale Investments, a Digital Currency Group subsidiary that offers an ETF-like product for cryptocurrency investment, urged patience to those who would prefer faster returns. “For anyone highlighting low volume on @Bakkt’s first day, I remind you of @CMEGroup’s slow start followed by massive development in liquidity,” he tweeted.

“Don’t overlook today,” Sonnenshein added. “This is an important development for the maturation of the $BTC market.”

Su Zhu, CEO and cofounder of the investment firm Three Arrows Capital, echoed Sonnenshein’s view. “Bakkt will be likely first a trickle and then a flood,” he wrote in a tweet.

Bitcoin is indeed growing up—and hormonal spurts are to be expected.

Nobody said puberty would be easy.

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Robert Hackett | @rhackett | robert.hackett@fortune.com

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DECENTRALIZED NEWS

To the Moon… Apple’s new credit card added more cash back partners. SEC Commissioner Hester Peirce told the House Financial Services Committee that some blockchain 'utility' tokens might not be securities. A woman is finally running a major European bank. Naspers and Galaxy Digital were part of a $15 million investment in Immutable, creators of blockchain-based card game Gods Unchained.

Rekt… Bitcoin hit three-month lows, possibly thanks to big margin calls on the Bitmex exchange. PayPal was hit with a fine for anticompetitive behavior in the U.K. Early Ethereum advisor Steven Nerayoff has been charged with extortion – and the allegations are tabloid-worthy. Facebook’s David Marcus argued the Libra project won’t threaten monetary sovereignty as national authorities close ranks against the project. News site CoinDesk retracted a report claiming that Kik CEO Ted Livingston had threatened to would quit the company over its ICO-linked legal troubles. CoinDesk says it was the victim of a hoax.

 

MEMES AND MUMBLES

No one can figure it out. It’s been like this for 2 days.

 

Neeraj Agrawal, head of communications for cryptocurrency policy think tank CoinCenter, tweeted the haunting image of a WeWork office door jammed by an umbrella that had fallen inside – and the rest is history. Agrawal says that, with nearly 28,000 retweets, it got more traction than any of his tweets about cryptocurrency (themselves very popular) ever have, “by a mile.”

The story was ultimately covered by The Guardian, and, with the kind of gentle gravity usually reserved for small-town murders, Vice.

FOMO NO MO'

A world of competing national digital currencies could set up a new kind of currency war. The U.S. dollar has been the world’s dominant currency since the 1920s. But if national digital currencies allow for faster, cheaper money transfers across borders, viable alternatives to the U.S. dollar could emerge, embraced by nations and monetary officials concerned about the dollar’s outsize influence on the global economy.

For those who have been paying attention to cryptocurrency for years, there are few things more confounding than watching giant corporations like Facebook take interest in a technology partly meant to displace them. One of those more confounding things is the growing interest in crypto from national governments, including, above all, China. Writing in the Wall Street Journal this week, Dave Michaels and Paul Vigna dive deep into the question of what a national digital currency might mean. No surprise, there would be big changes.

BUBBLE-O-METER

$90 Million

That was the size of CEO Patrick Byrne’s stake in Overstock.com . . . until he sold all of his stock this week, a sequel to his abrupt resignation in late August. Byrne, true to form, reportedly plans to invest the proceeds in gold, silver, and cryptocurrency to protect the money from “the Deep State.”

This edition of The Ledger was curated by David Z. Morris. Find past editions here, and sign up for other Fortune newsletters here. Question, suggestion, or feedback? Drop us a line.