On October 10, 2019, Bakkt — the physically-settled Bitcoin futures exchange backed by Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange — experienced a dramatic 796% spike in trading volumes, reaching a new all-time high just weeks after its underwhelming launch.
TL;DR
- Bakkt monthly Bitcoin futures volume surged 796%, from 25 to 224 contracts in a single day
- The spike was triggered by the SEC’s rejection of Bitwise’s Bitcoin ETF proposal
- Each Bakkt contract represents one Bitcoin, meaning 224 BTC were traded that day
- Rival CME traded 5,212 contracts (26,060 BTC) the same day, dwarfing Bakkt’s numbers
- Analysts say the volume surge was temporary, driven by market maker hedging activity
The Numbers Behind the Surge
After days of largely flat trading activity, Bakkt’s monthly Bitcoin futures contracts skyrocketed from just 25 contracts the previous day to 224 contracts on October 9-10, representing a staggering 796% increase. Since each Bakkt contract equals one Bitcoin, this translated to 224 BTC changing hands on the platform.
Bitcoin was trading near $8,586 at the time, according to CoinMarketCap data, with the total cryptocurrency market capitalization hovering around $218 billion. Ethereum sat at $191.66, with XRP at $0.27 and Bitcoin Cash at $230.
What Drove the Volume Explosion
According to Charles Phan, Chief Technology Officer at crypto derivatives platform Interdax, the volume spike was directly tied to the Securities and Exchange Commission’s rejection of Bitwise Asset Management’s Bitcoin ETF proposal. The SEC had been evaluating the proposal for months, and traders had positioned themselves in anticipation of the decision.
“Now that the outcome is clear, volumes have settled back down again,” Phan told Decrypt. The rapid decline suggested that the volume was driven by event-driven positioning rather than genuine organic growth in Bakkt’s user base.
Market makers also played a role in the volume spike. Phan explained that when traders interact with market makers on one exchange, those market makers often hedge their positions on another platform. In this case, Bakkt became a beneficiary of cross-exchange hedging flows triggered by the SEC announcement.
Bakkt vs. CME: A Stark Contrast
Despite the record day, Bakkt’s volumes remained a fraction of those at its primary competitor, the CME Group. On the same day, investors traded an average of 5,212 CME Bitcoin futures contracts, with each contract representing 5 BTC — translating to approximately 26,060 Bitcoin traded. That was more than 116 times Bakkt’s volume.
The CME had already reached all-time highs in Bitcoin futures trading volume in July 2019 and subsequently doubled its position limits for monthly contracts due to surging institutional demand. The gap between the two platforms highlighted the challenges Bakkt faced in attracting institutional capital.
The Physical Settlement Problem
Industry observers pointed to Bakkt’s physically-settled model as a potential barrier. Unlike CME’s cash-settled contracts, Bakkt delivers actual Bitcoin upon contract expiry — an innovative approach that nonetheless appeared to confuse some traditional finance participants.
Vaibhav Kadikar, founder and CEO of decentralized prediction platform CloseCross, noted that cash settlement tends to attract more speculative investors. “Given that these types of bitcoin futures tend to attract more speculative investors, there will be higher demand for cash-settled contracts,” he explained.
Mati Greenspan, senior market analyst at eToro, offered a blunter assessment: “It seems to me that Wall Street still doesn’t understand the concept of physically-settled Bitcoin futures.” He argued that one of Bakkt’s key selling points — actual Bitcoin ownership — was not yet fully appreciated by the institutional crowd.
A Slow Start With Bigger Ambitions
Bakkt launched in September 2019 with considerable fanfare, backed by ICE and with partnerships including Starbucks and Microsoft. The platform was heralded as a potential catalyst for bringing mainstream institutional money into Bitcoin. However, its first weeks were marked by disappointing volume figures, with some analysts at JPMorgan even suggesting that Bakkt’s weak debut contributed to a Bitcoin price decline.
The 796% volume spike, while encouraging, proved to be short-lived. Trading activity fell rapidly the following morning, returning to the subdued levels that had characterized Bakkt’s early operation. The average daily volume of 139 contracts (139 BTC) remained well below expectations for a platform backed by the world’s largest exchange operator.
Bakkt’s Options Play
Even as spot volumes struggled, Bakkt was already looking ahead to its next product offering. The exchange was preparing to launch Bitcoin options contracts, aiming to beat CME to market with this new derivatives instrument. Options would give traders more sophisticated hedging tools and potentially attract a different segment of institutional investors to the platform.
Why This Matters
Bakkt’s volume explosion and subsequent retreat illustrated a fundamental challenge in cryptocurrency market infrastructure: building the pipes is only half the battle. Education, liquidity, and trader familiarity matter just as much. The physically-settled model that Bakkt pioneered would eventually prove its worth, but in October 2019, the market wasn’t quite ready. For Bitcoin’s long-term thesis, however, the fact that ICE — the operator of the New York Stock Exchange — was committed to building Bitcoin infrastructure at all was perhaps the most bullish signal of all.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always conduct your own research before making investment decisions.
physically settled BTC futures was the innovation but Bakkt never got the volume. sometimes being first doesnt matter
physically settled was the right idea at the wrong time. Bakkt launched into a market that wasnt ready for institutional Bitcoin futures
796% sounds impressive until you realize it went from 25 to 224 contracts. CME did 5212 the same day
ice_cold_take_ ICE spent millions marketing physically settled futures and the peak was 224 BTC. the ROI on that launch was negative
224 contracts. 224. and they called it a volume explosion. bakkt was such a nothingburger at launch
The Bitwise rejection driving volume to Bakkt makes sense. Traders needed somewhere regulated to hedge
Bitwise rejection driving volume to Bakkt makes sense as a one time hedge. not the start of organic demand like ICE pitched it
Bitwise rejection driving volume to Bakkt was just traders hedging. the 796% number looks impressive until you see 224 contracts
CME doing 5212 contracts the same day and Bakkt celebrated 224. The gap was embarrassing
CryptoVeteran88 CME doing 23x more volume and Bakkt got all the press. PR doesnt equal product market fit
CME doing 5212 contracts and Bakkt celebrated 224. the gap was almost comical. Bakkt was always hype over substance
224 contracts celebrated as a 796% explosion while CME did 5212 the same day. bakkt was hype from the start
CryptoVeteran88 ICE spent months hyping physically settled BTC futures and the peak was 224 contracts. CME was already eating their lunch and never looked back
CryptoVeteran88 224 vs 5212 contracts on the same day. ICE had the NYSE pedigree and still got embarrassed by CME who just understood institutional clients better
796% surge sounds incredible until you see it went from 25 to 224 contracts. CME did 5212 same day. bakkt was always marketing
Mira A. ICE spent millions marketing physically settled futures and peaked at 224 BTC volume. the ROI was catastrophically negative
phys_settle_ physically settled was the right thesis but ICE couldnt build liquidity to save their life. Bakkt had institutional backing and still lost to CME who just understood their client better
224 contracts as an all time high and it still dwarfed by CME at 5,212. ICE spent millions on Bakkt marketing and got a rounding error in return
796% from 25 to 224 contracts is the most bakkt thing ever. CME did 23x that on a slow tuesday
Mirembe K. 224 BTC vs CME doing 26060 equivalent. Bakkt was a PR exercise with a trading desk attached
konami_code_ ICE spent more on the launch party than the total BTC traded is probably literally true. the marketing budget for Bakkt was estimated at 20M+ and they peaked at 224 contracts
physically settled BTC futures was 2 years too early. Bakkt should have launched in 2021 when institutions actually had crypto desks. the 2019 market wasnt ready
224 contracts and they called it a volume explosion. ICE spent more on the launch party than the total BTC traded that day
796% from 25 to 224 sounds like a headline designed for retail. CME did 26x that volume and nobody wrote about it
physically settled was the right thesis but Bakkt launched 2 years too early. if they had waited until 2021 when institutions were actually ready, the story would be completely different