The cryptocurrency derivatives market witnessed an unexpected twist this week as CME Group’s Bitcoin futures contracts saw a dramatic spike in trading volume, while the much-hyped Bakkt platform stumbled out of the gate. On September 23, 2019, Bakkt — the Intercontinental Exchange’s crypto venture — launched its physically-settled Bitcoin futures to much fanfare, but managed to trade only 71 Bitcoin worth of contracts on its first day. The following day, CME Bitcoin futures volume surged to approximately 14,000 contracts, demonstrating that the incumbent still had plenty of fight left.
TL;DR
- Bakkt launched physically-settled Bitcoin futures on September 23, trading only 71 BTC on day one
- CME Bitcoin futures volume spiked to 14,000 contracts the next day, September 24
- Bitcoin price dropped below $8,000, falling over 15% in a single hour on September 24
- CME’s year-to-date average was 7,237 contracts per day, but volumes had slumped to around 4,300 in recent months
- The market reaction challenged assumptions about institutional demand for physically-delivered Bitcoin futures
The Bakkt Hype Meets Reality
Bakkt had been positioned as a game-changer for institutional Bitcoin adoption. Backed by the parent company of the New York Stock Exchange, the platform offered something that CME and CBOE did not: physically-settled Bitcoin futures contracts. While CME’s contracts are cash-settled — meaning traders receive dollars at expiry rather than actual Bitcoin — Bakkt promised delivery of real Bitcoin, complete with its own custody solution regulated by the New York State Department of Financial Services.
The anticipation had been building for months. When Bakkt announced its September launch date in August after receiving CFTC approval, many analysts predicted it would unlock significant institutional demand. Instead, the launch day saw just 71 BTC traded, a figure that industry observers widely characterized as disappointing. For context, CME regularly processed thousands of contracts daily, each representing five Bitcoin.
CME Fights Back With Record Volume
What happened next surprised many market watchers. Rather than losing ground to Bakkt, CME saw its Bitcoin futures volume explode. On September 24, the day after Bakkt’s launch, CME processed approximately 14,000 contracts — a dramatic increase from the roughly 4,300 contracts traded on average between late July and mid-September.
This surge suggested that Bakkt’s launch, rather than drawing volume away from CME, may have actually stimulated broader interest in Bitcoin derivatives. Tim Court, Managing Director and Global Head of Equity Products at CME, had previously noted that the exchange averaged 7,237 Bitcoin futures contracts per day year-to-date. The 14,000-contract day represented nearly double that average and came close to the peaks seen during Bitcoin’s explosive rally from $4,000 to over $8,000 in April 2019.
Bitcoin Price Takes a Beating
The derivatives market drama coincided with a brutal sell-off in Bitcoin spot prices. On September 24, Bitcoin plunged more than 15% in a single hour, falling from the $8,200 range to below $8,000. By September 28, Bitcoin was trading at approximately $8,245, having shed roughly 10% for the week after spending much of the previous month in the $10,000 to $11,000 range.
Altcoins did not escape the carnage. Litecoin hit its lowest price since March 2019, while Ethereum traded at approximately $174, down significantly from its recent highs. The total cryptocurrency market cap contracted sharply, with most major assets posting losses for the week.
What the Bakkt Flop Means for Institutional Adoption
The weak Bakkt launch raised important questions about institutional demand for cryptocurrency products. While the platform’s physically-delivered model was theoretically superior for price discovery and market integrity, the reality was that institutions appeared to prefer the convenience and familiarity of cash-settled products like those offered by CME.
Several factors likely contributed to Bakkt’s slow start. The platform had a lengthy regulatory approval process that delayed its launch multiple times, potentially dampening initial enthusiasm. Additionally, institutional traders often prefer to test new platforms with minimal capital before committing larger positions. The low initial volume may simply reflect a cautious approach rather than a lack of genuine interest.
The CME volume spike also demonstrated the resilience of established financial infrastructure. Institutions already had accounts, risk management systems, and trading strategies built around CME’s products. Switching to a new platform — even one with theoretically better features — requires significant operational changes that do not happen overnight.
Why This Matters
The events of late September 2019 provided a valuable lesson in market dynamics and institutional behavior. The assumption that a physically-settled Bitcoin futures product backed by the NYSE parent company would immediately dominate the market proved overly optimistic. Instead, the incumbent CME demonstrated that established infrastructure and familiar products carry significant weight in institutional finance. The Bitcoin price crash that accompanied these events — a drop below $8,000 after weeks near $10,000 — also highlighted the continued volatility of the cryptocurrency market and the outsized influence that derivatives products can have on spot prices. Bakkt would eventually find its footing, but its debut served as a reminder that in both crypto and traditional finance, hype and reality often diverge sharply.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. The cryptocurrency market is highly volatile, and readers should conduct their own research before making any investment decisions.