An unknown trader or group of traders has placed
a million-dollar bet that the bitcoin price will
reach $50,000 by the end of 2018.
As first reported by The Wall Street Journal ,
trading data from LedgerX — the first U.S.
exchange to list bitcoin derivatives — shows that
an unidentified trader or group of traders paid $
990,000 for the right to purchase up to 275
bitcoins in 2018 — at a price of $50,000 each.
The bet was made using a call option, a contract
that allows the buyer to purchase an asset at a
particular price on or before a specific date, no
matter what the current market price is. In this
case, the buyer or buyers paid an average of $
3,600 per bitcoin — a fee roughly equivalent to
one-fifth of a bitcoin at today’s exchange rate —
to lock in a price of $50,000 until Dec. 28, 2018.
If the trader exercises the full value of that
option, they will have to pay $13,750,000,
bringing the full value of their investment to
nearly $15 million.
Although the trader remains unidentified, LedgerX
CEO Paul Chou hinted that the bet was indicative
of rising interest from institutional investors ,
many of whom remained on the sidelines due to
the lack of robust bitcoin derivatives markets on
regulated exchanges.
“Without a doubt, there are institutions out
there that are looking at these types of trades
or have done these types of trades,” Mr. Chou
told the Journal. “It’s not an individual, let’s
put it that way.”
The bet is incredibly bullish, indicating that the
trader believes there is a significant chance the
bitcoin price will continue its meteoric trend into
the new year, even as bitcoin bulls like Pantera
Capital’s Dan Morehead warn that a bear market
may lie on the horizon.
Just to break even, the bitcoin price will need to
reach $53,600 — plus the cost of trading fees,
representing an increase of approximately 320
percent from its current value of $16,764,
according to the CCN Bitcoin Price Index. This
means that, effectively, the bitcoin price could
triple over the next year and the buyer would still
lose money on the trade.
However, if the bitcoin price does manage to
replicate this year’s unprecedented performance
in 2018, it could prove to be the trade of a
lifetime.
