Economist: Here’s how one Bitcoin call option could provide a 2,100% ROI by 2021 🚨 This article is 5 years old...
Economist: Here’s how one Bitcoin call option could provide a 2,100% ROI by 2021
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Updated: Mar. 30, 2020 at 7:14 am UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
One economist is now noting that one simple trading strategy could provide Bitcoin believers who are receiving a $1,200 cash payout from the U.S. government’s newly passed stimulus bill with a way to maximize their money.
This strategy is only effective for those who anticipate Bitcoin to climb higher by the end of the year, but there is a chance it could yield up to a 2,100% return over the coming year.
This potential return is based on a highly popular economic model that many analysts are looking towards as an impetus for massive Bitcoin upside in the near-term, which forecasts that the benchmark cryptocurrency will be trading at $38,000 by December.
U.S. Senate passes unprecedented stimulus bill; providing many Americans with $1,200 cash payouts
Earlier today the Senate passed what is now the largest emergency aid package in US history.
This bill is attempting to combat the economic damage created by COVID-19 by providing aid to small businesses, corporations, and workers who have been heavily affected by the pandemic.
As part of this bill, all Americans who earn under $99,000 per year will receive a one-time check for up to $1,200, as well as $500 per child.
This cash payout is anticipated to be cycled into the economy, thus giving it a much-needed boost.
Some analysts have also noted that Bitcoin-friendly individuals who receive this payment may be apt to purchase the digital asset.
This theory is highly speculative, however, as many receiving the cash will likely use it to pay bills and sustain their lifestyles, as many Americans are currently facing layoffs and furloughs.
Economist: here’s how Bitcoin-friendly investors can maximize their returns
Assuming that a portion of these individuals do want to spend their checks from the government on Bitcoin, however, Alex Krüger – a popular economist who focuses primarily on crypto – is noting that there is a simple way they could maximize their return on investment.
Krüger explains that by using a Dec/2020 Bitcoin call option with a $12,000 strike price, rather than simply buying spot BTC, optimistic investors could see a 2100% return on their initial investment – assuming BTC climbs to $38,000 as its stock-to-flow model predicts.
“The US govt will give everyone a $1,200 handout, allowing one to buy one Dec/2020 bitcoin call option with $12,000 strike. A stock-to-flow model forecasts BTC at $38K by then. If such forecast were accurate, the investment would yield a 2100% return, vs. 470% from buying spot.”
Naturally, this is a relatively risky bet, as its success hinges on the possibility that Bitcoin will climb significantly higher by the end of the year.
Despite this, it could be a great strategy for those looking to garner the highest possible return on this “free money.”
Bitcoin Market Data
At the time of press 7:14 am UTC on Mar. 30, 2020, Bitcoin is ranked #1 by market cap and the price is down 0.5% over the past 24 hours. Bitcoin has a market capitalization of $112.93 billion with a 24-hour trading volume of $31.49 billion. Learn more about Bitcoin ›
Crypto Market Summary
At the time of press 7:14 am UTC on Mar. 30, 2020, the total crypto market is valued at at $172.47 billion with a 24-hour volume of $103.36 billion. Bitcoin dominance is currently at 65.46%. Learn more about the crypto market ›
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Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network.
Alex Krüger is an economist, technical analyst, cryptocurrency trader and founder of Aike Capital.