Bitcoin Bettors Beware, Hedging Can Turn Your Wager Upside Down

Bitcoin Bettors Beware, Hedging Can Turn Your Wager Upside Down

Mar 05 Tech Standard

The world of crypto is no stranger to bold (and sometimes unwise) bets. Remember Balaji Srinivasan's infamous prediction that Bitcoin would hit $1 million in just 90 days? He folded his hand after a mere 45.

Now, Bitcoin maximalist Peter McCormack is making headlines for a new wager with Michael Green, a financial strategist Bitcoin reaching $100,000 by year-end. While the bet isn't finalized yet due to escrow issues, the potential outcomes are intriguing.

McCormack, at 5-1 odds, stands to lose $100,000 if Bitcoin fails to break $100,000 by December 31st. However, Green may not be as exposed as it seems. Financial instruments like futures, options, and even ETFs allow him to hedge the bet, essentially ensuring a profit regardless of Bitcoin's price movement.

Ben Hunt from Epsilon Theory suggests Green might intentionally lose the bet to secure a larger profit through hedging. Green himself hints at this, calling the bet a chance to expose the bad math skills of it's just math proponents and potentially profiting from McCormack's speculative gains.

McCormack, however, maintains it's a lighthearted shits and giggles wager, claiming Green misses the point.

While Bitcoin reaching $100,000 isn't impossible, it's crucial to remember

  • Crypto bets aren't like simple gambling Financial instruments allow for complex strategies like hedging, potentially negating the gamble aspect.
  • Confidence shouldn't equal recklessness Making bets, especially with significant sums, should be done with a clear head, not fueled by impulsive decisions.

The story remains unfinished as an escrow agent isn't confirmed. Regardless, it serves as a reminder of the complexities involved in crypto bets and the importance of understanding the full picture before diving in.


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