Bitcoin could hit $50,000? Some traders may actually think so!

As Bitcoin rebounds from its winter lows, some traders in the gray cryptocurrency market are betting that it could jump to $50,000, more than double its all-time high during the Bitcoin craze in 2017, according to the Wall Street Journal.

Such “super trades” have emerged in bitcoin options in recent weeks as bitcoin has risen more than 130% since the beginning of the year, to nearly $8,700 on Sunday.
Many investors have soured on bitcoin after it plunged more than 70% in 2018. And the few bullish bets in bitcoin options don’t mean its current rally will last.
On LedgerX, a New York-based bitcoin derivatives marketplace, an unidentified trader on May 23 bought 30 bitcoin call options, which allow the holder to buy bitcoin for $50,000 between now and June 2020. The individual spent $4,500 on the options, trading records show.
If the price of Bitcoin doesn’t reach $50,000 (the option’s strike price) and the person holds the contract until expiration, they lose the money. But if Bitcoin soars above $50,000, the trader could make a huge profit, earning a much higher return than they could have earned by buying and holding Bitcoin.
The May 23 trade was small for the bitcoin market, where billions of dollars worth of bitcoin are traded every day. But it’s worth noting that LedgerX co-founder and COO Juthica Chou said LedgerX hadn’t seen call options trading back to the $50,000 level in more than six months. She added that LedgerX also saw a resurgence in bitcoin call options trading activity in May with a strike price of $25,000.
On Thursday, one or more traders at Amsterdam-based bitcoin derivatives exchange Deribit also began buying bitcoin call options, which would pay off only if bitcoin rises above $36,000, according to trading records. According to Skew, a British market analysis firm focused on bitcoin derivatives, this is the first time in several months that someone has bought or sold bitcoin on Deribit at such a strike price.
“When you see a bull run, people get a little excited and they start making more and more aggressive trading decisions,” said Josiah Hernandez, chief investment officer at cryptocurrency trading firm Satoshi Capital.
Aggressive trading in bitcoin options is not new. At the peak of the bitcoin craze in December 2017, a trader on LedgerX bought nearly $1 million worth of bitcoin call options at a $50,000 strike price, similar to the options purchased last month. But those options expired worthless in December as bitcoin fell.
Options can be used in a variety of trading strategies. Without knowing the traders’ broader portfolios, it’s impossible to determine their true objectives for the recent purchases of bitcoin options on LedgerX and Deribit. Hernandez said the purchases could be part of a hedging strategy, a larger bet on bitcoin’s volatility, or simply a speculative bet on bitcoin’s rise.
Ari Paul, chief investment officer of cryptocurrency hedge fund BlockTower Capital, has admitted to being behind a $1 million options trade in 2017. Paul said in an email that he bought the options as part of a larger trade that was profitable overall.
However, Paul warned that Bitcoin options trading is not for the faint of heart. He said: "I would caution non-professionals not to trade options." (Tencent Securities)