How high can Bitcoin go? Someone thinks its remarkable bull market will continue right up to $50,000—and they’re putting their money where their mouth is.
As the Wall Street Journal reports, an unnamed investor or investors have purchased a series of options contracts worth nearly $1 million. The contracts, sold on the LedgerX derivatives exchange, are “calls” that give the owner the right to pay $50,000 by late next year to purchase units of the popular digital currency:
The trade wagering on a move to $50,000 was the first of its kind on LedgerX. … Just under $1 million was paid for the options in one or more trades that took place during the 24-hour period ending at 4 p.m. Eastern Time on Wednesday, the records show. It is unclear from LedgerX’s data who the buyer or buyers were or whether the purchasing was done in multiple transactions or just one.
If bitcoin is below $50,000 on Dec. 28, 2018, the options will expire worthless, and the $1 million will be lost. If bitcoin rises above that level, the options will give their owners the right to buy 275 bitcoins for $50,000 apiece—a transaction that would cost about $13.8 million.
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The call options represent an extremely bullish position even for Bitcoin since, as the Journal notes, they will be worthless if bitcoin doesn’t break the $50,000 mark by the end of next year.
Such an increase would represent an approximately 150% percent increase on bitcoin’s all-time high, which almost broke $20,000 this month. This is not improbably given that bitcoin opened the year around $1,000.
On the other hand, the unnamed options owner is not off to a great start. The price of bitcoin has stumbled in the last 24 hours, falling to a recent low of $15,2000 amid a controversy involving the popular exchange Coinbase, and the surge of a rival currency known as Bitcoin Cash.