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Daily: Bakkt Bitcoin Futures, China’s digital currency, and more news
September 24  |  3 min read

Don’t Jump to Conclusions

BeQuant Analytics, a daily cryptocurrency market analysis contributor

Social media is abuzz with takes on yesterday’s launch of Bakkt’s physically settled Bitcoin futures, specifically focusing on how underwhelming a showing it was. First-day volume for the platform was equivalent to 71 Bitcoin, and, to put that in perspective, CME’s first day saw 5,298 Bitcoin traded. It is certainly too early to call this a “flop” being that, as pointed out in the past, some of their largest prospective clients still don’t have permission to trade physically-delivered futures contracts. At the same time, some futures brokers may simply not be ready to clear them. It is also important to remember the broader implications of the launch — the platform enables the physical delivery of Bitcoin with end-to-end regulated markets and custody. As such, the dent in sentiment, which resulted in Bitcoin sliding back below 10k and Ethereum below $200, may serve to be a good opportunity to re-establish longs. Also, it is worth noting that 50% of CME Bitcoin futures open interest is set to expire this Friday, it is possible that some will transition to Bakkt.

Looking at Ethereum, since July, the number of Ethereum-based Tether transactions has increased from around 18,000 per day to 187,912 as of September 9. These transactions now account for 25% of all Ethereum activity. At the same time, USDT Omni layer has around 40,000 transactions. The case for Bitcoin may not appear as bullish anymore.

The unintended consequence, of course, is network clog-up; the amount of gas used per day has risen to 60 billion units. In particular, it is worth noting how aggressively it rose from 50 billion to 60 billion over the course of September, all while the blockchain network was supposed to be full and out of capacity. In response, Ethereum miners have increased gas limits to allow for more transactions per block. This is roughly equivalent to increasing the block size for Bitcoin blocks.

In other news, China has no specific launch date in mind for its digital currency, its central bank has said in fresh comments contradicting previous statements. As pointed out by Cointelegraph citing local English-language news outlet Global Times, the People’s Bank of China (PBoC) has now denied Beijing is ready to debut its new financial asset. According to the publication, which did not quote governor Yi Gang directly, the PBoC “needs to research, test, evaluate and prevent risks.”

Elsewhere, the number of initiatives dedicated to scaling the Ethereum blockchain is manifold. Ethereum 2.0, Plasma, Raiden, zk-SNARKs – the list goes on. On Monday, blockchain research and development startup Matter Labs announced a $2 million seed round led by Placeholder VC to develop a new scaling initiative atop the Ethereum blockchain.

Thank you for reading,

The BeQuant’s Analytics team