Cryptocurrency investment fund Galaxy Digital and over-the-counter (OTC) trading firm XBTO have conducted the first-ever block trade of Bakkt's bitcoin futures contract.
Intercontinental Exchange (ICE), Bakkt's parent company, announced the trade Friday but did not disclose its size. A block trade is a large transaction that takes place off the open market in order to avoid moving the price too much.
The trade, which took place Tuesday, comes on the heels of a disappointing launch last week for the much-hyped Bakkt, whose on-exchange volume in its first five trading days totaled just over $5 million.
Two years in the making, Bakkt is the first live market in the U.S. for bitcoin futures that are physically delivered, meaning the buyer receives the underlying commodity.
Despite Bakkt's inauspicious debut, Galaxy Digital and XBTO expressed confidence in the platform.
“As the digital asset class continues to mature, we view the launch of Bakkt as a foundational piece of market infrastructure,” Galaxy Digital said in ICE's press release.
XBTO said in the release that it bought the first bitcoin daily futures last week, in addition to participating in the block trade.
The new bitcoin futures contract has been closely watched by crypto investors, as well as in the broader financial industry, where it's been billed as a product that might attract allocations from institutional money managers, including hedge funds, pension funds and endowments.
Galaxy Digital is led by Mike Novogratz, a former Goldman Sachs executive who later helped run the hedge fund Fortress Investment Group. XBTO's CEO is Philippe Bekhazi, a formerly of Citibank and Steven Cohen's SAC Capital hedge fund.
Friday's press release from Atlanta-based ICE didn't state whether the block trade was made in the exchange's monthly- or daily-settled futures contracts.
In the first two weeks since the start of trading, almost all activity has taken place in the monthly contract, but, even there, activity has disappointed.
Some market analysts have even said that the sluggish uptake contributed to a drop last week in bitcoin prices, since it indicated a lack of demand among institutional investors - with most individual investors currently to gravitate toward the futures contracts started in late 2017 by the rival Chicago-based exchange CME.
In the first four days of this week, just 260 of the Bakkt's monthly futures contracts changed hands, worth about $2.1 million at the closing price of $8,152 per bitcoin on Thursday. While data wasn't available for Friday, the pace of trading is down from last week's volume of 623 contracts, which carried a value of just over $5 million.
On Tuesday, when the block trade crossed, some 27 of the monthly contracts changed hands, for a value of just $226,584 based on that day's closing price. No volume was reported in the daily contract for the day.
Bitcoin prices were little changed in the 24 hours through 17:00 UTC on Tuesday, though were down sharply from over $10,000 prior to the Bakkt contracts' debut on Sept. 19, based on CoinDesk's Bitcoin Price Index.
CoinDesk's Michael Casey with Bakkt CEO Kelly Loeffler and ICE chairman and CEO Jeffrey Sprecher, image via CoinDesk archives