LedgerX, a regulated futures exchange based in the United States, has launched physically settled Bitcoin (BTC) futures contracts. This allows investors to get physical delivery of BTC, and some analysts believe this will increase the impact on the price of BTC.
Daily chart for the XBT / USD pair. Source: TradingView.com
How can physical delivery affect the price of Bitcoin?
When Bakkt first started with the support of its NYSE parent company ICE, it received a lot of attention. Most of the interest surrounding the platform has been in the physical delivery of BTC. That is, if the institutes so wish, they can actually hold BTC through Bakkt’s security service.
At that time was the General Counsel of Jake Chervinsky emphasized that this could potentially affect the price of Bitcoin. Said::
“Also noteworthy is the fact that Bakkt will hold and deliver real bitcoins. This means that institutional inputs would reduce the supply and thus (maybe) the price too. This is different from other regulated futures markets like CME and CBOE, which only trade futures with cash settlement. “
Physically settled Bitcoin contracts can have an impact on the price of BTC as it has a real impact on the supply. When investors trade futures contracts for cash settlement, they are not buying actual BTC to hold long-term positions in the asset. This reduces the possible impact on the provision of the cryptocurrency.
On the LedgerX futures exchange, investors who take long positions in BTC can receive a physical delivery of the digital asset. The exchange’s order book provides complete transparency about the depth of the market so that institutions can examine the market. LedgerX stated:
“Investors can abandon their position or hold it until it expires and, if this takes a long time, receive a BTC delivery. All orders are executed in our central limit order book with full price transparency in the depth of the market. Block trades are also traded in the central limit -Order book printed. “
The increase in the number of futures exchanges offering physically settled Bitcoin contracts This could benefit the overall liquidity of the market. Zach Dexter, the CEO of LedgerX, said:
“Futures have always been part of the company’s roadmap and we’re excited to launch today. Futures and options are an important part of the business landscape and we believe it is important to list a full set of products. Improve liquidity Platform and the ability to effectively hedge against risks. “
The futures have slumped slightly in the past few weeks
In the past few weeks, especially after Bitcoin’s steep rejection of $ 12,000, The futures market crashed. Trading volume declined and open interest also declined significantly, particularly on platforms geared towards retail investors.
Despite the short-term decline in momentum for Bitcoin Institutional activity has continued to skyrocket.
September 2nd Barry Silbert, CEO of Grayscale, said the company’s assets under management had reached an all-time high. Of $ 6.3 billion in crypto assets under management The Grayscale Bitcoin Trust represents $ 5.054 billion.
With increasing institutional activity in the Bitcoin market A diversified set of products from various regulated companies should further strengthen the market infrastructure.