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BlockTower Capital Loses $1 Million Bet On $50,000 BTC

source-logo  usethebitcoin.com 29 December 2018 10:18, UTC

BlockTower Capital, a recognized hedge fund in the space, will have to pay a $1 million after losing a bet. The company said that Bitcoin (BTC) was going to reach $50,000 during 2018. However, this did not happen and it might not happen in the next days before 2019. The company will be losing $1 million in options by the end of the current week.

Bitcoin Did Not Reach $50,000

During 2018, Bitcoin and other virtual currencies have been in a very hard bear trend. Bitcoin, for example, lost more than 82% of its price, but other virtual currencies lost more than 95% of their value.

When Bitcoin was close to reaching $20,000 in December 2017, everyone supposed that it was going to keep growing. There were some analysts that believed that the bull market was going to continue in 2018. Nevertheless, this did not happen and the market plummetted reaching lows in more than a year.

Indeed, back in 2017, BlockTower Capital’s co-founder, Ari Paul, made a bet on behalf of the company. He mentioned that Bitcoin would be worth more than $50,000 by the end of 2018. He spent almost $1 million on call options to buy 275 bitcoins at $50,000 before 2019. If the total options were exercised, BlockTower could have spent $13.8 million on these Bitcoin.

During a conversation at CNBC, Paul said that it was not a bet that it was going to happen. Indeed, it was a bet related that something could happen. However, there were several other experts that predicted Bitcoin to reach new highs in 2018, something that did not happen in the end.

On the matter, he said:

“One thing to understand with options: a deep out of the money call is not a bet that something ‘will’ happen, it’s a bet that something ‘might’ happen. Risk a little to win a lot.”

At that time, some individuals believed that the drop experienced by virtual currencies was due to holidays and they expected prices to rebound. This did not happen and the prices were not able to recover from that drop. Indeed, they kept falling even further to new lows.

At the time of writing this article, Bitcoin is traded around $3,900 and it has a market capitalization of $67.97 billion. In the last 24 hours, it grew 2.67%.

usethebitcoin.com