LedgerX Unveils New Product
Bitcoin-centric derivatives platform LedgerX has just unveiled a helluva product.
Reported first by Bloomberg, the American exchange that recently secured a derivatives license from the Commodity Futures Trading Commission (CFTC) will be allowing traders to bet on if Bitcoin will pass $100,000 by December 2020. The call option will pay only if BTC manages to surmount that crazy milestone by December of 2020, which is still around 18 months away.
According to Paul Chou, the chief executive of the startup, institutional customers that have assets valued at anywhere from $10 million to $1 billion have expressed interest in this new vehicle. Chou adds:
I understand $100,000 is a large number, but a lot of us who’ve been in this space remember Bitcoin at $1, and then it hit $10 and $100 and $10,000. A $100,000 contract doesn’t even make us blink.
As reported by Ethereum World News previously, LedgerX has received clearance from the CFTC. This regulatory green light will allow the company to list physically-settled BTC futures, which are far different than the paper contracts offered by the CME.
According to CoinDesk, chief operating officer Juthica Chou has claimed that her company has no exact timeline, but she noted that LedgerX is looking to be the incumbent in this market. Chou adds that LedgerX intends to “serve customers of all sizes”, hinting that there may be a much-needed retail component to this upcoming product, something that Bakkt is seemingly not focusing on yet.
Is a $100,000 Bitcoin Possible?
Alright, so now that you know that such a zany product is available, do analysts think that Bitcoin achieving $100,000 by 2020 is possible?
According to one model, just maybe. The model is from analyst PlanB and centers around the idea of the stock-to-flow ratio (SF).
The stock is the value of an asset, usually a commodity, above the ground/produced; the flow is the growth in the supply of said asset in any given year. These two sums can be combined to form a ratio, which defines scarcity by how much inflation an asset sees (the higher, the more scarce).
According to an analysis compiled by PlanB, the value of commodities like gold and silver can be plotted, and thus predicted, by a stock-to-flow valuation model.
In a recent tweet, the analyst noted that if you take BTC’s prices in all historical Octobers, then plotted it against his stock-to-flow model, Bitcoin fits it to a 99.5% R2.
The model predicts that should Bitcoin continue to follow the model to an eerie degree of accuracy, BTC could reach over $100,000 a pop after May 2020’s halving event. You see, when the cryptocurrency’s block reward reduction arrives, the SF ratio naturally increases, doubling actually.
The model doesn’t predict exact price action on a day-to-day and month-to-month basis, but it does show that a six-figure Bitcoin is entirely possible.
Title Image Courtesy of Through Catalog Via Unsplash