Bakkt cash settlement Bitcoin The futures were launched in December 2019 at the request of the public. Physically settled Bitcoin futures exposed traders to the risk of holding the asset and did not exactly fly among derivatives traders.

Despite initial hurdles, cash settled Bitcoin futures have doubled in volume in the last six months. The interesting thing is that it has maintained a constant volume of operations.

Bakkt Cash Settled BTC Futures Volume Doubled in 6 Months

Source: Sesgar

This chart is more consistent than the volume of cash settled futures in CME or the aggregate of the major derivatives exchanges, based on bias data.

Aggregate daily volumes on major exchanges and CMEs show significant declines. Among the main reasons, the most popular is the general perception that cash-settled futures can be manipulated quite easily, as they are settled using a formula that takes prices from some third-party spot market with potentially low volumes, in rather than simply delivering the underlying at maturity. .

Derivatives traders maintain accounts on derivatives exchanges and cash. They take Long / short positions on cash settled futures on derivatives exchanges and during settlement use their wallet balance on spot markets to move the reference price up or down, and this is the value captured by the exchanges derivatives and used in its settlement formula.

This manipulation is possible only due to the low liquidity in the spot exchanges from which the price reference is drawn. Once these traders receive their earnings from the cash settlement, they undo their position on the cash exchanges. While this manipulation is difficult to track, there is a sharp move just before the scheduled sell-off and this is clearly visible on the CME chart. However, this is not evident in Bakkt cash settled Bitcoin futures.

At Bakkt, growth has been constant for the past six months. However, the Bakkt chart for physically settled Bitcoin futures has a different growth trajectory.

Volume rallied in the last week of July 2020 and has been consistently above $ 80 million, crossing $ 100 million multiple times. Cash settled futures have been more popular compared to physically settled futures and there is steady growth in the former. This shows that the Bitcoin futures contracts on Bakkt have performed steadily for the last 6 months and the demand for them is constant on the exchange.

Bakkt Bitcoin futures contracts may be the only ones that are not tampered with and the only ones that have doubled in volume with steady growth in the last 6 months.

This is a machine translation of our English version.

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