After the serious dive of Bitcoin last week, people have been accusing Bakkt Exchange as the source of problem. What is it actually? Is it really not worth considering any longer?
What is Bakkt Exchange?
Bakkt is a Bitcoin futures exchange. It works under InterContinental Exchange, which also the operator o the New York Exchange.
The launch of the platform was not smooth. It has to experience a one year delay due to regulatory problems. And only receiving a trustee license from the New York Financial Services Agency in August.
Initially, markets are expecting that if Bakkt Exchange operates normally, it will start entering organizations. And it will increase price of bitcoin by introducing additional liquidity. But what happened is the exact opposite.
How does it works?
First of all, traders must pay for the deposit needed to make margin trading on the platform. According to John Todaro of TradeBlock in Coindesk, “the deposit needed for margin trading is “an asset of the collateral nature that should be left to trade futures contracts.”
Customers are required to pay $3,900 as the initial deposit (regardless of the contract for gifts that are settled daily or monthly). The investment transaction deposit, not the basic transaction deposit, is $4,290 a bit more expensive.
The basic transaction deposit can fluctuate between $400 and $1,000. While the investment transaction deposit will change between $440 and $1,100, according to Bakkt. It explained that the detailed adjustment rate “may vary depending on the maturity of each product.”
If you apply the expected margin rate described in Bakkt’s FAQ published last month, the margin will be about 37 percent when the current 10,000-dollar bitcoin was purchased directly as a gift contract. The spread ranges from $400 to $800. It also explained that the risk management unit of its parent company ICE can adjust the margin rate depending on market conditions.
Despite Bitcoin dive, is it still worth considering?
Actually, it is. Even though the dive was deep and went on continuously, it is still too early to judge anything about Bakkt Exchange.
According to Fortune magazine, Bakkt CEO Kelly Loefler said, “Backt will ensure that Bitcoin can be safely traded within the system. Of course, it is not clear whether asset management companies will immediately increase the portion of bitcoin investments after Bakkt’s launch. It looks like weeks to months of testing will be needed.”
