Bakkt is online, but the transaction volume is completely different from what everyone imagined. What about traditional investors who have agreed to enter the market? What about the big bull market?
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1. Why do you need an exchange like Bakkt?
King: We are a compliant fund. From the perspective of being responsible for LP money, if we want to do bitcoin futures, Bitmex, OKex, etc. will not be our choice. For spot trading, we also choose compliant exchanges such as Coinbase and Bitstamp. The emergence of Bakkt and CME complements the gap in compliant futures platforms.
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2. For a compliant Crypto Fund, what is the risk appetite and return expectation of LP?
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3. Is the trading volume of Bakkt on the first day in line with expectations?
King: It was as expected.
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The role of FCM in the traditional futures trading market
Our fund has participated in Bitcoin futures for about a year (CME Bitcoin futures), and the performance is very good and the intermediary agents have also accumulated good credit value.
But at present, we have consulted with the mainstream FCMs in the United States and the Asia-Pacific region, and they are basically in a wait-and-see state, with only two supporting them immediately.
In addition, according to the report of the Wall Street Journal, some large liquidators, such as Goldman Sachs, did not enter the market immediately. This may also be one of the reasons for the low trading volume.
Of course, this may also be related to Bakkt’s market strategy. There are not many account opening channels for high-net-worth individuals and small institutions, and it may be mainly for large institutions.
This has led to many general investors who want to enter the market, such as high-net-worth miners, either cannot find a good FCM, or are still on the way to get an account.
Another reason is that all futures products take a certain amount of time to become successful, and CME has also experienced a period of time before it has the current scale, so Bakkt also needs some time to develop.
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4. How to open an account in Bakkt? Is the threshold high?
King: As I mentioned in the last question, Bakkt is essentially a product of the U.S. futures market. What was your account opening process in the U.S. futures market in the past, what is the process now, KYC, qualification verification, 1v1 inquiry, etc.
The biggest difference between opening an account with the current mainstream digital currency exchanges is that you need to find an intermediary. Large exchanges like the United States generally do not deal directly with small institutions and individuals, but will have a special FCM approach.
However, a FCM license generally costs tens of millions of dollars to obtain. Small organizations and individuals can ask FCM to open an account. The relationship between FCM and FCM is relatively good, so an intermediary intermediary account opening process is formed.
When opening a futures account, IB and FCM pay more attention to whether they will run away. Because in a highly volatile market, if there is a liquidation, the customer has no money to pay them, and they have to bear the risk.
Therefore, when opening an account, their own risk control is very strict, which will cause the customers capital utilization rate to be low (that is, the leverage ratio is very low). It takes a long time of cooperation before they dare to let go of more trading authority. The professional threshold is very high.
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5. What is the difference between playing futures on Bakkt or CME and playing futures on Bitmex?
King: Investors are more professional, because both FCM and the platform will review you.
In addition, there is no common 100x leverage, and the highest leverage of CME is 2.7 times. It is estimated that Bakkt will be similar.
After chatting with Mr. King, my feeling is that everyones expectations for the price increase of Bitcoin are really too high. Whether it is Bakkt or the ETF that has not yet been launched, what meets everyones expectations is probably a surge in trading volume once it goes online, and then Bitcoin The price skyrocketed.
But no matter it is a traditional financial institution that operates and uses it, stability is the first element. Even with a platform like Bakkt, there is no way to easily throw hundreds of millions of dollars into the market in an instant like a currency exchange. After all, it is only for the platform. , the audit and review steps will not be short.
If the style of the currency circle is that boats do not rely on oars, but rely entirely on waves, then when using oars for traditional financial boats, you probably have to consider how much you need to pay if you damage the boat with too much force.
