BlockTower Capital Executive's BTC Options Purchased for $1 Million Will Likely Be Worthless

Ari Paul, the chief information officer and managing partner at BlockTower Capital, a cryptoasset investment firm, had purchased a call option for nearly $1 million that had predicted a bitcoin (BTC) price of $50,000 by December 28th, 2018.

However, as the contract’s expiry date approaches, the BTC price continues to fall sharply as it’s currently trading at around $3,400 according to CryptoCompare data. Notably, bitcoin’s value is down nearly another 10% in the past 24 hours, the lowest it has been since August 2017.

Not "As Bad As It Seems"?

Paul, a former portfolio manager at the University of Chicago, had purchased the million dollar call option “just days” after the bitcoin price reached an all-time high of nearly $20,000 on December 17th, 2017. According to Bloomberg, the outcome of the trade, which will likely result in huge losses for the buyer (as BTC price would have to rally over 1,400% for the contract to be profitable), is not “as bad as it seems.”

Paul claims he had purchased the options from LedgerX’s exchange while also selling some of his crypto fund’s BTC holdings. During an interview with CNBC (on December 27th, 2017), the hedge fund manager had explained that the trade let him “lock-in” some profit - while reducing exposure to the market’s volatility and potentially receiving a huge payout if BTC price exceeded $50,000 by end of 2018.

On the date when Paul acquired the options, bitcoin was trading at around $16,200, however, the price of the flagship cryptocurrency and all other digital assets has dropped considerably from their all-time highs in December of 2017. In his interview from last year, Paul told CNBC: 

These calls let me capture upside while reducing my downside risk.

LedgerX, Paul Have Not Shared Details Of Their Trading Activities 

The investment advisor also told his followers on Twitter that his trade, which involved selling a portion of his BTC holdings and simultaneously purchasing the call options, was a profitable move. However, Paul has not publicly shared the performance of other cryptoassets that are under his management.

LedgerX, the first US-based regulated bitcoin options exchange, has also not identified who the buyer or the seller of its options contracts are, but the company did confirm that the said position was entered. LedgerX’s management team further noted that the position has a notional value of $13.75 million, and that it is the largest BTC options trade conducted on its platform.

Crypto Market-Maker Altonomy Receives $7 Million in Funding from Polychain Capital

Altonomy, a New York-based cryptoasset trading, advisory, and asset management company, has completed a $7 million fundraising round from Polychain Capital, a leading hedge fund and venture capital firm.

Co-founded by Ricky Li, a former Manager of Research and Product at the CME Group, Altonomy has also received funding from 7 Blocks.

Additional Capital Will Allow Altonomy to Have More Inventory

Commenting on how the additional capital could help Altonomy’s business operations, Li said: 

As a liquidity provider for altcoins, more funding will allow us to have more inventory, taking larger exposure and managing risk more effectively.

Li added that the extra funding would allow Altonomy’s trading desk to provide better services - as the platform would not need to “put constraints” on customers at settlement.

Funds May Be Used to “Source Liquidity for Customers”

Olaf Carlson-Wee, the Founder and CEO at Polychain Capital, remarked:

As a long-time user of Altonomy’s trading services, it was an easy decision for us to invest in their business when the opportunity became available.

Carlson-Wee, a former Product Manager and Head of Risk at Coinbase, also mentioned that the additional funding would help “source liquidity for customers, regardless of token type, order size, market cap, or whether the asset trades on centralized or decentralized exchanges.”

According to Coindesk, Li had suggested to investors in January 2019 that they “liquidate enough ETH so they would have at least two years of runway.” However, Li is now anticipating that cryptocurrency prices may continue to recover - after enduring a long bear market that lasted throughout 2018.

Altonomy Introduces Cloud Service for Crypto Mining

In addition to providing crypto trading and asset management services, Altonomy introduced a new product last year, called the AltMiner. According to Li, AltMiner’s cloud service allows Altonomy’s bigger investors to mine various cryptocurrencies.

Altonomy’s management claims that the AltMiner has a “superior return profile” with the “newest generation of miners, low electricity costs and a secure hosting site.”

During an interview with CryptoGlobe in May 2019, Lee explained how Altonomy’s crypto trading services were developed and their potential benefits.

One of Altonomy’s main services, called electronic execution, allows mining firms, investment companies and crypto exchanges to “enter and exit positions as an outsourced execution desk.”

As a high-frequency market-maker, Altonomy also provides liquidity for various tokens to several crypto spot and derivatives trading platforms.