Bitcoin futures are still in their infancy on the Cboe Futures Exchange and CME, but that is not stopping some traders from making large bets on the high-flying cryptocurrency.
Data from digital currency-trading platform LedgerX show some traders are making large bets on bitcoin call options expiring in December 2018.
“Online records from New York-based digital currency-trading platform LedgerX showed 275 call options expiring Dec. 28, 2018, were bought in Wednesday’s trading session at a volume-weighted average price of $3,600. At that price, roughly $1 million was spent on the bet,” reports CNBC. “The trade gives the investor or investors the option to buy bitcoin at $50,000 in the roughly next 12 months, implying expectations that the digital currency will soar beyond that price. An investor would lose the bet if bitcoin doesn’t reach $50,000 in that time period, but would reap profits if it climbs well above that level.”
Just over a week ago, bitcoin futures debuted on the Cboe, prompting a wave of filings from ETF issuers. To date, bitcoin ETFs have not been approved by U.S. regulators. Several ETF issuers filed plans earlier this year for such products, but the plans were scrapped because, at the time of those filings, there was not a bitcoin futures market.
Related: Plans Filed to List ProShares Bitcoin ETFs on NYSE
Earlier this week, it was revealed that Direxion and Reality Shares filed plans with the Securities and Exchange Commission (SEC) to list bitcoin ETFs.
Some market observers believe the launch of bitcoin futures will speed the introduction of exchange traded funds based on the digital currency. In recent weeks, several ETF issuers have also filed plans for blockchain ETFs, which would hold stocks with exposure to the digital currency trade.
“With bitcoin trading near $16,700 Thursday, that means the call options trader or traders expect the digital currency to soar more than 200 percent in the coming 12 months. Bitcoin is up about 1,900 percent over the last 12 months, according to Coinbase,” reports CNBC.
However, on Friday morning the price of one bitcoin plummeted to below $13,000, according to Coinbase.
It was also reported earlier this week that the New York Stock Exchange has filed plans to list two bitcoin ETFs from ProShares, one of which would be an inverse fund designed to profit from declines in the digital currency.
For more information on the cryptocurrency market, visit our Bitcoin category.