28 Dec Trader Bets $1 Million that Bitcoin Price Will Reach $50,000 in 2018
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.”