We now know who was behind the $1 million bet that bitcoin could soar to $50,000

Kara Chin

• The Wall Street Journal reported earlier this week that a trader or group of traders made a $1 million bet bitcoin could go to $50,000 by December 2018.
• People familiar with the matter told Business Insider that hedge fund BlockTower Capital made the trades

On Wednesday an unidentified entity made a $1 million bet that bitcoin would trade above $50,000 by December 2018. Cryptocurrency hedge fund BlockTower Capital was behind the bet, according to people familiar with the matter.

The Wall Street Journal first reported the bet, which was made on LedgerX, a cryptocurrency options exchange. At that point it was unclear whether one entity was behind the options bet, and whether it was made up of one or more trades.

The call options expire December 28 and give BlockTower Capital the ability to buy 275 bitcoin at $50,000 per coin. 

BlockTower Capital is among the best known crypto hedge funds in a booming space that now includes over 175 such firms, according to fintech analytics firm Autonomous NEXT. BlockTower was founded by Ari Paul, formerly of trading firm Susquehanna, and Matthew Goetz, a former VP at Goldman Sachs.

Paul tweeted about the WSJ story on Thursday: 

He followed up that tweet by saying: 

"One thing to understand with options: a deep out of the money call is not a bet that something *will* happen, it's a bet that something *might* happen. Risk a little to win a lot."

Bitcoin has been under pressure this week as bears storm the market. It was trading down 16% at $12,970 Friday as the entire cryptocurrency market shed over $100 billion in market cap in just 24 hours.

Still, bulls remain resolute that better days are ahead for the crypto-market.

"The holidays are a notorious time for crypto prices to drop - that has been the case over the past several years," Dan Novaes, chief executive office of Current Media, a blockchain technology company, said.

"After the holidays, I expect the prices to rebound," he said.