Bitcoin’s price has been in a slump this week after reaching record highs in the USD $19K territory. Since then the price has drifted into the $13K, region losing $6,000 in gains this week. Although the price has seen better days, an unknown trader utilizing the Ledger X options market purchased a contract that predicts the price of bitcoin will be $50,000 by December 28, 2018.
Ledger X Trader Pays $1M to Peg a Bitcoin-Based Futures Contract at $50,000 for December 2018
The Ledger X exchange is a regulated swap execution facility and derivatives clearing organization. The trading platform was approved by the U.S. Commodity Futures Trading Commission (CFTC) to trade and clear bitcoin-based options products. Ledger X has been trading bitcoin futures products well before Cboe, and CME group joined in on offering bitcoin derivatives contracts. Back in November many bitcoin proponents thought it was a big deal when Ledger X sold its first long-term options contract for $10,000 scheduled for December 28, 2018. Now the stakes are a bit higher, as one anonymous trader paid close to a million USD to place a bet on the same date but with a price pegged at $50,000.
The Trader Was Likely a Hedge Fund or Financial Institution
According to Ledger X, the long-term trade was the “first of its kind” held on the exchange for a sum that large. The Wall Street Journal details the trader had to put up $1 million USD to purchase the long bet, and if the price of bitcoin is below the $50K on that specified date, the investor will lose that money. The chief executive of Ledger X, Paul Chou, explains the firm will not reveal the identity of the trader due to CFTC restrictions. However, a big contract sale like that one usually stems from a financial institution Mr. Chou revealed.
“Without a doubt, there are institutions out there that are looking at these types of trades or have done these types of trades — It’s not an individual, let’s put it that way,” Mr. Chou detailed.
Placing a Very Optimistic Bet During Bitcoin’s Extremely Bearish Week Across Alternative Futures Exchanges and Global Spot Markets
Ironically, the Ledger X options bet was placed during the bearish dip taking place this week as bitcoin’s price is seeing a substantial loss in value. The bid also took place while other options products from Cboe and CME Group have been bidding low numbers for the next four months’ futures sessions. Cboe’s last contract peg was $12,210 for the January 8 expiry even though two weeks ago contracts reached a high of $18,600. CME Group’s contracts started out well above the $20K zone for the four-month sessions, but contracts are pegged much lower now. CME’s January contracts are $12,265, and February through June is a touch above in the $12,595 region.
Market data on December 21 for the bitcoin-based options provided by Ledger X shows the exchange has a lot of action, and price can range from very high pegs at $50,000 to contracts below $5,000. If the price hit $50,000, bitcoin would see an increase of 354 percent over the course of the year from the current spot market price on December 22.
What do you think about the Ledger X contract pegged at $50,000 being placed during a bearish week across global spot markets? Let us know in the comments below.
Images via Shutterstock, Ledger X
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