Bitcoin’s Institutionalization: Dates to Watch in 2019
It’s been over a year since the Cboe and CME listed the world’s first bitcoin futures contracts, the first ever bitcoin investment product to hit the legacy market. Both futures went live just before bitcoin peaked at its $20,000 all-time high. Out-the-gate trading for the derivatives reflected 2017’s market mania, and Cboe’s futures alone traded over 800 contracts (roughly $12,000,000 at the time) within the first two hours of their launch.
With the creation of these markets, the euphoric anticipation of bitcoin’s debut on Wall Street conjured up delusions of grandeur. The seemingly unstoppable asset, which had transcended all-time high after all-time high with ease all throughout the 2017 holiday season, was on the cusp of receiving its largest flush of capital yet.
Cue 2018 and the bear.
Now, bitcoin is down about 80 percent from its all-time high. Its introduction into mainstream institutional markets obviously did not send us to a new paradigm, and some in the community even believe that the futures invited the opposite effect — that they were the cause of the crash.
2018 was not the year of institutionalization that some bitcoin investors hoped that it would be. Instead, it’s been a Sisyphean struggle to give Wall Street an easier in, perhaps best exemplified by the industry’s repeated trial and failure to get an ETF approved by the United States Securities and Exchange Commission (SEC).
Still, there are a handful of outstanding deadlines and tentative launch dates that could make 2019 the actual year that bitcoin makes headway in the institutional investment scene. The products related to these deadlines include two futures offerings and VanEck’s long-anticipated bitcoin ETF.
For these products, here are some dates to look out for and a brief explanation of how they work.
ICE’s Bakkt: January 24, 2019
The Intercontinental Exchange (ICE), the New York Stock Exchange’s parent company, first announced Bakkt in August of this year. Described “as a scalable on-ramp for institutional, merchant and consumer participation in digital assets” by its CEO Kelly Loefller, the platform was pitched as a crypto payment solution with an added bonus: physically delivered futures contracts.
Unlike current futures products offered by the Cboe and CME, which are not physically delivered and settled in cash, Bakkt’s contracts would be settled in kind with bitcoin. Originally anticipated to launch in November of 2018, the platform has been delayed until the tentative date of January 24, 2019.
Bakkt’s team delayed the launch to hammer out customer customer onboarding and work with regulators on approval. It should be noted that, as of this writing, Bakkt has not received regulatory approval from the United States Commodities and Futures Trade Commission (CFTC) to list the futures.
VanEck/SolidX Bitcoin ETF: February 27, 2019
Fewer institutional grade investment products have bathed in the industry limelight quite like the VanEck and SolidX bitcoin exchange traded fund (ETF).
The latest in a slew of attempts by various actors to offer the world’s first bitcoin ETF, the VanEck SolidX Bitcoin Trust is the only bitcoin ETF introduced in 2018 whose filing hasn’t been decided on by the SEC. Unlike most of its 2018 predecessors, the ETF would source its prices from the bitcoin spot market — not the Cboe and CME futures markets.
The SEC has delayed its decision on the VanEck SolidX ETF twice, but come February 27, 2018, it will have to make a decision, though in reality one could come sooner than this.
In addition to this ETF, the SEC will also have to make its final decision on nine other ETFs which, after being rejected at the staffing level, were appealed for review by the commission. At the time of publication, no dates have been disclosed for when this decision might take place.
Nasdaq’s Bitcoin Futures: Q1 of 2019
Nasdaq teased the prospect of launching its own bitcoin futures throughout 2018, and, as we head into 2019, the exchange is looking to make good on its promises.
But these promises are still a bit nebulous. The exchange hasn’t released many details regarding how the futures will operate, nor has it given much information on the launch date. We do know that their tentative launch date is expected to fall in Q1 of 2019, and Nasdaq has partnered with VanEck to source prices with VanEck’s MVIS Bitcoin Index.
Like Bakkt’s own futures, Nasdaq has yet to receive the greenlight from the CFTC to list the futures.
Photo by Scott Webb on Unsplash