BlockTower Capital, a hedge fund that manages over $130 million in client assets is set to lose a Bitcoin bet made last year that the top cryptocurrency will hit 50,000 by the end of this year. Ari Paul the company’s co-founder and chief information officer made a bet last year that Bitcoin would outperform its peak price achieved in the previous year something that is yet to materialize.
The
Bitcoin bet was worth $1 million
Business Insider found out that Paul had spent $1
million on call options which were to buy 275 Bitcoins at $50,000 apiece at any
time before 28th December 2018. Interestingly if the options were to be
exercised, the company would have spent up to $13.8 million.
But, since Bitcoin is currently trading at $3,900 its safe to say that BlackTower Capital will not be exercising those options. When the company made the decision, it was ‘risking a little to win more.’ Even Paul did an interview on 26th December of last year emphasising that it wasn’t a bet on something was to happen, but one that something would happen and he loved the odds of the move.
However, this December Paul has come out to clarify
his stance telling Business Insider that his company was not betting on or
expecting that Bitcoin would rally. However, the options were a way for
BlackTower Capital to maintain exposure to an extreme rally as they reduced the
overall cryptocurrency exposure.
Interestingly, the fund’s bet on the future of
cryptocurrency isn’t the only of its kind. At the beginning of this month,
Morgan Creek Digital Assets made a bet public that the Bitwise index fund of
crypto coins would outperform the S&P 500.
According to many, the bet was a direct challenge to
the people that see crypto as a Ponzi scheme believing that it was destined to
fail.
What’s your take on BlackTower’s Bitcoin bet? Share
your thoughts in the comment section below.
