This $1 Million “Bet” On Bitcoin Reaching $50,000 Has Been Lost

ByJoseph Gibsonon January 9, 2019inArticles›How Much Does

Late in 2017, Ari Paul of cryptocurrency hedge fund BlockTower made a bet of sorts that Bitcoin would reach a price of $50,000 in a year’s time. The bet consisted of spending just under a million bucks on Bitcoin call options which would give him the opportunity to buy 275 bitcoins at $50,000 apiece any time between when the call options were purchased and Friday, December 28, 2018. Now, time’s up, and no late breaking miracle saved Paul’s million dollar bet on Bitcoin.

The loss didn’t come as a surprise to Paul or any other cryptocurrency experts. In an email to Business Insider about the state of the bet, he said that “we were not betting on or expecting” a rally in the price of bitcoins, and that contrary to a bet that would be won or lost, the call options were purchased as “a way for us to maintain exposure to an extreme rally while reducing overall crypto exposure.”

In the days leading up to the December 28th deadline, the value of Bitcoin was hovering at around $3,800 per bitcoin, and it was abundantly clear that Paul’s ambitious bet had long been lost. But Paul’s concept of the result of the bet being relatively unimportant is consistent – in a 2017 CNBC interview he described it as “not a bet that something will happen, but a bet that something could happen.”

<img loading=“lazy” src=“https://vz.cnwimg.com/thumb-900x/wp-content/uploads/2018/12/GettyImages-887657568.jpg" onerror=“this.onerror=null;this.src=‘https://blogger.googleusercontent.com/img/a/AVvXsEhe7F7TRXHtjiKvHb5vS7DmnxvpHiDyoYyYvm1nHB3Qp2_w3BnM6A2eq4v7FYxCC9bfZt3a9vIMtAYEKUiaDQbHMg-ViyGmRIj39MLp0bGFfgfYw1Dc9q_H-T0wiTm3l0Uq42dETrN9eC8aGJ9_IORZsxST1AcLR7np1koOfcc7tnHa4S8Mwz_xD9d0=s16000';" alt=“This $1 Million “Bet” On Bitcoin Reaching $50,000 Has Been Lost - 1”>

Dan Kitwood/Getty Images

Whether or not a $50,000 Bitcoin could have happened is more of a theoretical question, but as of this writing it’s sitting at just over $3,587 per, so such a rally would be a surprise, to put things mildly. There are other major cryptocurrency bets still in progress, though, as Cryptoslate notes, with Creek Digital Assets announcing a bet of its own

“Earlier in December, Morgan Creek Digital Assets publicized a bet that the Bitwise index fund of cryptocurrencies would outperform the S&P 500.”

The site says that it’s possible that Bitcoin could recover to that point sometime in 2019.

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An Anonymous Trader Places $1M Bet That Bitcoin Will Hit $50,000 Next Year

ByJoseph Gibsonon January 4, 2018inArticles›How Much Does

Bitcoin has seen better days, but investors in the cryptocurrency believe steep drops and climbs come with the territory. One investor on the online currency trading platform LedgerX put that belief where his wallet was with the purchase of 275 call options to purchase bitcoins at $50,000 sometime between now and December 28th, 2018 – a clear indication in the trader’s belief that the cryptocurrency’s value will rocket past that point in the next year, according to CNBC. That indication is especially clear given the amount the investor put into those call options: They reportedly had a volume-weighted average price of $3,600, which brings the total investment to almost $1 million.

It’s very possible that the investor (or investors) in question has begun to sweat a bit regarding his investment. When the CNBC story on the gambit was posted, Bitcoin was trading at almost $16,700 per bitcoin, while as of this writing it stands significantly lower, at about $14,400. But hey, Bitcoin wouldn’t be worth gambling on if it didn’t come with risks, right? Speaking of risks, here’s how CNBC characterizes the investment/bet:

“An investor would lose the bet if Bitcoin doesn’t reach $50,000 in that time period, but would reap profits if it climbs well above that level.” ROSLAN RAHMAN/AFP/Getty Images

That’s the long and the short of it, and now the waiting game begins to see if Bitcoin can reverse recent trends and climb to that all-important $50,000 margin or beyond. Nick Colas of DataTrek Research probably wouldn’t be too optimistic about the likelihood of such a climb if he was asked – according to his recent prediction about Bitcoin’s future prospects:

“Bottom line: bitcoin can rally to $22,000 and still be reasonably priced, or plummet to $6,500 and also be correctly valued. We expect to see bitcoin trade for both prices in 2018.”

The gamble is also a new frontier for LedgerX, which is a young company at less than five years old and has only been offering bitcoin trading functions since October of this year.

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