Zealous crypto traders will soon be able to bet on Bitcoin soaring to $100,000, surpassing recent bets that the world’s largest cryptocurrency by market capitalization will reach $50,000, as reported by Bloomberg.
Crypto World Revived
This mega-bullish call comes even as the widely followed digital currency has swung dramatically this year, suffering a sharp decline in recent days. At a price around $10,600 per coin on Thursday evening, the price of Bitcoin has dropped near 25%, from when the digital coin reached new highs in 2019 near $13,800. The sharp increase in Bitcoin prices up to that point re-energized crypto bulls who had been awaiting the end of a drawn out “crypto winter,” which started at the end of 2017, when Bitcoin neared an all-time high of $20,000, and persisted throughout 2018.
Now, U.S.-regulated derivatives exchange LedgerX has announced a call option that pays off if Bitcoin breaks through the $100,00 per coin threshold by December 2020. This level would value Bitcoin at about $2 trillion, and would represent an approximate ten-fold increase from Bitcoin levels at the time of the announcement this week.
LedgerX, which has offered Bitcoin derivatives to institutional clients for three years, won regulatory approval in June 2019 from the Commodity Futures Trading Commission to offer contracts to smaller, mom and pop investors.
Institutional customers with assets of between $10 million and $1 billion each have expressed interest in the new derivative, according to LedgerX CEO Paul Chuo, per Bloomberg.
“Often what happens is the first trade is the most important, and everybody else watches it,” he said. “Dozens and dozens of these institutions got back to us saying we’d be interested in trading a contract like this,” said Chief Executive Officer Paul Chou.
While Bitcoin to $100,00 is a bold call, for cryptocurrency investors who have been in its since the digital coin made its debut just one decade ago at a price of less than one cent, a ten-fold increase wouldn’t be all that crazy.
"I understand $100,000 is a large number, but a lot of us who’ve been in this space remember Bitcoin at $1, and then it hit $10 and $100 and $10,000. A $100,000 contract doesn’t even make us blink,” said Chuo.
The LedgerX announcement follows announcements from other Bitcoin derivatives exchanges, such as CME Group and BitMEX, that say demand from institutional traders are driving trading volumes to records, per Bloomberg, citing a recent report from research firm Diar.
In an effort to access funds from that growing number of institutional investors interested in trading crypto-derivatives, Intercontinental Exchange is slated to launch its first Bitcoin futures trading on July 22. Last month, after a year and a half of offering bitcoin futures contracts, Cboe Global Markets Inc. halted their trading.
The recent movement in Bitcoin prices, including a climb of $1,000 in just 30 minutes Thursday, reflects the major volatility that is still a trademark of the cryptocurrency space, despite wider mainstream adoption. Other mishaps in the industry, already plagued with issues such as a variety of scandals, fraud, and market manipulation, have led lawmakers to call for more regulation on the nascent industry.
For example, on Saturday, Bitcoin’s major plunge was attributed in part to a “fat finger” trading error, in which Tether Ltd. mistakenly created over $5 billion of its dollar-backed currency in an instant and flooded the market -- spooking investors.
Growing concern from crypto-skeptics has dampened the enthusiasm initially felt from Facebook Inc.’s (FB) decision to jump into the market with plans for its own digital currency called Libra. This week, the social media giant testified in front of lawmakers, who called the crypto plan “delusional” and compared the Silicon Valley tech giant to a toddler playing with matches.