Bakkt: Not that native crypto after all Bakkt: Not that native crypto after all Bakkt: Not that native crypto after all

Bakkt: Not that native crypto after all

Cryptocurrencies 10 minutes to read
Mads Eberhardt

Cryptocurrency Analyst

Summary:  Founded by NYSE-owner Intercontinental Exchange, Bakkt is the crypto-focused entity established on a traditional legacy. However, Bakkt misses the crypto nativeness to take on the battle against the companies founded on a profound crypto legacy.

We recently added Intercontinental Exchange-founded Bakkt Holdings, Inc. to our Crypto and Blockchain theme basket along with two other companies, CoinShares International Limited and Stronghold Digital Mining, Inc. In this article, we zoom in on Bakkt since it is founded by a well-known financial exchange operator along with great expectations and a high market capitalization relative to its revenue.

From the New York Stock Exchange to the crypto market

Bakkt was founded in 2018 by NYSE-listed Intercontinental Exchange Inc - known broadly as ICE - who happens to own the New York Stock Exchange as well. Bakkt is founded around offering retail and institutional investors access to the crypto market through spot and derivatives trading in addition to institutional-grade crypto custody. On top of this, Bakkt offers retail users access to gift cards, rewards, and a physical credit card with the option to be credited in the users’ cryptocurrency portfolio. Bakkt has partnered with prominent companies such as Starbucks and MasterCard for their gift card and physical credit card product.

Bakkt has somewhat high expectations for its growth in the coming years. The company expects to have a total of 31mn users in 2025 from 1.7mn active users in the first three quarters. In comparison, Robinhood has 22.4mn users with funded accounts as of the end of the previous quarter. The expected 31mn users together with its other institutional-focused products are according to the company projected to deliver net revenue of $515mn in revenue in 2025. In comparison, Coinbase had net revenue of $1.31bn in the most recent quarter.

Source: Bakkt Holdings

Perchance not that crypto native

Bakkt was founded as virtually a crypto-first company, likely for Intercontinental Exchange Inc. to tap into the market without doing it directly under its own brand. Though looking at their crypto products they are not deeply crypto-first by heart, and in case they think they are, they have misunderstood what users involved in the industry want.

First, Bakkt has great expectations for its spot trading arm. It is not straightforward to see whether Bakkt manages its own order book or they source liquidity from other venues. If it is the former, they are likely short on sufficient volume to guarantee small spreads and enough volume to handle larger positions. If it is the latter, they will be likely short on earnings. At the same time, they are missing out on the competitive advantage of having their own order book with sufficient liquidity to be leveraged in future products.

On the other hand, retail investors in crypto do not deeply care about volume nor spreads, so in that case, they will perchance be alright, but they will have a challenge regarding institutional clients demanding highly liquid markets. In terms of retail clients, Bakkt does not charge a flat fee, but instead a spread of up to 1.5%. Competing in a market where it is fundamentally a race towards zero lead by NASDAQ-listed Robinhood with zero commission on crypto trading, Bakkt’s margins will likely come under pressure in the future. It is the equivalent argument we raised when Coinbase made its debut on NASDAQ earlier this year since the company earns the most on substantial retail trading fees. Due to this, we expect the earnings of Bakkt and particularly Coinbase to be severely hit when tough competition genuinely hits the industry.

Until the beginning of November, Bakkt solely offered support for Bitcoin trading. On 5 November, though, the company started offering support for Ethereum as well. This stresses the single largest challenge for Bakkt, in our opinion, they are everything but deeply focused on the crypto market nor the demand of retail investors in the space. No retail investor in the space solely wants to choose between Bitcoin and Ethereum. They want the obtainability to choose between more crypto assets, even though Bitcoin and Ethereum are surely the ones being traded the most. We have seen this with Coinbase which has recognized the demand for the trading of a vast number of cryptocurrencies. At the end of 2017, Coinbase had solely four cryptocurrencies listed on its exchange. As of writing, there are more than 100 tradable cryptocurrencies on the exchange. To further emphasize that Bakkt is not deeply rooted in the crypto space, is the fact that you cannot withdraw Bitcoin or Ethereum outside the Bakkt ecosystem. As a company founded to serve the needs of crypto investors, this is not someone with an understanding of the market or the needs of stakeholders involved in it since clients cannot take part in decentralized finance or non-fungible tokens (NFTs) by not being able to withdraw cryptocurrencies.

Rewards, gift cards, and payments to consumers

Bakkt has rewards, gift cards, and payments in its consumer app. Both rewards and gift cards are strongly dependent on the collaboration with retailers, as they need to incorporate Bakkt into their system to take part. The payment is virtually a Visa Debit card. When using the card, clients can be credited in either cash or their Bitcoin or Ether. The offering should be able to attract clients, but Bakkt is not the first to launch such a card. Other companies including let clients be credited in over 20 respective cryptocurrencies, not solely in Bitcoin and Ether.

Institutional crypto offering

Other than offering retailers to take part in their rewards and gift cards offer, Bakkt is offering a white-label solution for companies wanting to offer brokerage of Bitcoin and Ethereum. Once again, Bakkt is being hit severely in this offering due to the exclusive support of Bitcoin and Ethereum. On another note, they are offering institutional-grade custody, fully audited, which other serious institutional-grade crypto custodians offer as well. Though maybe they can win clients based on them being founded by ICE as it should arguably give some credibility. On the other hand, as institutional clients cannot currently sincerely trade crypto assets at Bakkt, they are not a powerhouse such as Coinbase, BitGo, Bitcoin Suisse, and Genesis in terms of institutional support. With their present institutional offering, it will be firmly challenging for Bakkt to gain traction in this segment.

Bakkt has Bitcoin derivatives as well, namely futures and options listed on ICE Futures U.S. Their futures are the only ones with settlement in physical Bitcoin within a traditional regulatory environment, which is commendable. The futures have been tradable for around two years. Though, their volume is everything but impressive. It is due to multiple elements. One is if you are an institutional familiar with the crypto industry, you go to the crypto native futures exchange, namely FTX, Deribit, and Binance. If you want to do it fully regulated, most go to CME. CME has the most traded Bitcoin and Ethereum futures within familiar regulated territory and is used to hedge the recently launched Bitcoin ETFs. For instance, the current open interest measured in contracts is 13,000 Bitcoin contracts at CME and only 175 contracts at Bakkt. In other words, CME has won that battle, for now at least.

Looking ahead

Conclusively, for Bakkt to compete in the crypto market, they need to be crypto first. This means introducing more cryptocurrencies across the board, making clients able to withdraw and deposit cryptocurrencies, and enabling the staking of crypto assets. On the institutional side, Bakkt must form an all-in-one solution with brokerage sourcing liquidity from many venues, low spreads, minor fees, reliable API, leverage, and integrated custody. If Bakkt does not genuinely improve its crypto offering, they can forget about competing in the crypto market. There is one analyst that covers the stock and has put out a hold recommendation with a price target of $13.50 compared to yesterday’s close at $13.76.

Disclaimer: The author holds a long CFD position in Coinbase.

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article

Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (
- Analysis Disclaimer (
- Notification on Non-Independent Investment Research (

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000

Contact Saxo

Select region


The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.