Analyst Names Five Reasons Bakkt Struggles to Compete With BitMEX

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Mon, 02/10/2020 - 06:31
Alex Dovbnya
Bakkt's Bitcoin (BTC) futures are too expensive and too cumbersome for the average Joe compared to unregulated products offered by BitMEX and other unregulated exchanges
Analyst Names Five Reasons Bakkt Struggles to Compete With BitMEX
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Contents

Su Zhu, the CEO of Three Arrows Capital, has named five main reasons why Bakkt, a crypto subsidiary of ICE, lags behind other exchanges, such as BitMEX and Deribit. 

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Five reasons traders stay away from Bakkt

Bakkt has so far failed to come close to the unregulated derivatives market in terms of trading volumes despite being under the wing of the NYSE owner.    

Zhu explained that reliance on clearing brokers and lack of margin trading in BTC dampened the enthusiasm of traders. The list of cons doesn't stop there β€” on top of being 10 times more expensive, Bakkt doesn't allow 24/7 trading. What's more, there is no way to trade minuscule amounts of BTC. 

Still, Chicago-based CME Group seems to be doing just fine with its futures volumes exploding in 2020. However, its trading numbers still don't come close to BitMEX or Deribit.      

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Regulators clamp down on unregulated trading 

US citizens are barred from trading on BitMEX, the biggest derivatives exchange that is based in Seychelles. However, these restrictions can be easily circumvented with the help of a VPN.    

Back in July, the CFTC launched an investigation into the Arthur Hayes-helmed crypto juggernaut to determine whether or not it allowed Americans to trade on the exchange.

The FCA also moved to protect British traders from perilous derivatives trading.  

About the author

Alex Dovbnya (aka AlexMorris) is a cryptocurrency expert, trader and journalist with extensive experience of covering everything related to the burgeoning industry β€” from price analysis to Blockchain disruption. Alex authored more than 1,000 stories for U.Today, CryptoComes and other fintech media outlets. He’s particularly interested in regulatory trends around the globe that are shaping the future of digital assets, can be contacted at alex.dovbnya@u.today.