BlockTower Capital, a Crypto hedge fund which manages hundreds of millions of dollars in client assets made a Bitcoin bet on December 20, 2017 through its current Chief Information Officer, Ari Paul, that the price of Bitcoin would hit more than $50,000 by the end of 2018. The prediction by the company has failed since Bitcoin is currently trading below $5,000 and BlockTower is expected to lose over $1 million in options by the end of the week in this shocking “Bitcoin Bet Gone Wrong”.
According to Business Insider, the bet would have enabled Paul, who spent just under $1 million on call options, to buy 275 bitcoins at the price of $50,000 per one any time before December 28, 2018. In total, if the options were exercised BlockTower Capital could have spent up to $13.8 million. The company placed the bet on LedgerX, a cryptocurrency options exchange last December, as earlier stated.
However, given the current dispensation in the crypto industry, with the price of Bitcoin currently hovering around $3,600, it’s safe to say that BlockTower Capital won’t exercise those options.
At the time, BlackTower Capital still stood by their decision saying it was a way to “risk a little to win a lot.” During an interview with CNBC on December 26, 2017, Paul said that “it was not a bet that something will happen, but a bet that something could happen,” and that he liked the odds and payout of the move.
In another interview with Business Insider in December 2018, Paul said that they “were not betting on or expecting” a Bitcoin rally. He maintained that the options were a way for the fund to maintain exposure to an extreme rally while reducing overall crypto exposure.
Without doubt, Paul’s prediction is among the list of other lackluster Bitcoin price predictions in 2018.