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I am thinking a short position in bitcoin is in my near future. I am not saying bitcoin is doomed to fail but I am pretty confident this shit coin crazy is goin

• fourstar 9y ago
  How would you even go about doing that?
  • jraines 9y ago
    You can short btc on several platforms, including Bitfinex
    • JumpCrisscross 9y ago
      > You can short btc on several platforms, including Bitfinex There is a horrible counterparty correlation in this trade. If Bitcoin goes up, you're out your short and lose lots of money. If Bitcoin crashes, the exchange runs into problems and you probably lose your original investment. Balanced against those is the limited profit potential from a marginal drop in the price of Bitcoin.
      • problems 9y ago
        Why would the exchange run into problems in such a case? Some are certainly more reputable than others, but for the most part there's no reason to worry there.
        • JumpCrisscross 9y ago
          > there's no reason to worry there There are failure modes that have plagued exchanges for centuries. Namely, when things go down (a) lots of activity happens in a short period of time, often leading to administration and technical failures, and (b) lots of people lose money which presages them (i) refusing to pony up and (ii) suing.
        • zwily 9y ago
          Typically during BTC crashes even the best exchanges struggle to keep up with the load of people selling.
        • grey-area 9y ago
          Questions around the solvency of bitfinex have been circulating for years. Do they even allow USD withdrawals at present? Their actions are weirdly reminiscent of the long fall of mt gox.
        • joosters 9y ago
          As well as the reasons mentioned by others, Bitfinex in particular is an exchange that is in deep financial difficulties. It has no working banking partners for anyone to withdraw USD, and their pseudo-$ currency 'Tether-USD' is rumoured to be massively over-issued to cover their account shortfalls.
  • solotronics 9y ago
    also, you can short the GBTC security on your brokerage account
• rm_-rf_slash 9y ago
  "The market can stay irrational longer than you can stay solvent." YMMV.
  • richardknop 9y ago
    I agree. I would also short crypto but it's too dangerous now as the tulip mania could still grow more before it pops. Once the bubble clearly pops then I'd start actively shorting as there will be months of bear market probably after the reversal.
    • gruez 9y ago
      >Once tre bubble clearly pops then I'd start actively shorting as there will be months of bear market probably after the reversal. I seriously doubt that logic would work, because it's very possible that by the time you think the bubble clearly "popped", it has already reached the bottom. Not to mention that half the market is planning the same thing.
• jraines 9y ago
  The ICOs are like 80-90% ETH based though. Good luck on the short . . . many hedge fund gods were "right" on the tech bubble but lost their shirts trying to short it before the exuberance subsided
  • sharemywin 9y ago
    I got burnt by the trump bump in the stock market.
• austenallred 9y ago
  Even if you had a high degree of confidence that would happen eventually (which I'm not convinced you do), such a play would be absurdly risky, especially given no idea as to the timing.
  • jimmykennedy 9y ago
    It's also weird to assume that it'll "drag the "legitimate" crypto currencies down". It's much more likely that the legit ones will be a "safety" asset and only gain in credibility with large investors.
    • CamelCaseName 9y ago
      Historically that has not been the case, when BTC falls, everything else does as well.
      • 33W 9y ago
        I see BTC as the crypto reserve currency, so it would make sense for the others to fall with it.
    • phkahler 9y ago
      It's funny to me that you view any of the crypto currencies as legitimate.
      • snappyTertle 9y ago
        It's funny to me that you trust fiat money that can be devalued at the whim of governments and central banks.
      • cgmg 9y ago
        Why is that funny to you? What do you mean by "legitimate"?
        • phkahler 9y ago
• walrus1066 9y ago
  Beware that: “The market can stay irrational longer than you can stay solvent.” (John Maynard Keynes) Especially relevant to short selling
  • acjohnson55 9y ago
    100%. I agree that BTC has been in a bubble, but if I had ever acted on this hunch, I'd be so far underwater right now. There's no telling how long the rally might continue, nor where the correction will settle. The other commenter made the astute observation that the less leveraged way to make this bet would be to go long on some competing asset.
    • rothbardrand 9y ago
      One of my personal indicators that Bitcoin is in a bubble is when Bitcoin articles on hacker news are overrun with people talking about their bitcoin related businesses, instead of being overrun with skeptics and people saying it's in a "bubble". We have gone from %90 negative a couple years ago on HN to about %50 negative today.
      • arglebarnacle 9y ago
        To be fair, if bitcoin had improving institutional support, adoption, technology, etc., you would observe the same trend in HN discussion about it. That would seem to make it a problematic indicator of a bubble, at least on its own. Of course, if one rules out the possibility that cryptocurrency is going to be a thing, then it's in a bubble by definition any time it's worth more than zero. This appears to be the underlying view of at least some commenters here.
        • kuschku 9y ago
          Look at what happened out there. When Bitcoin first hit $1000, many businesses started accepting bitcoin, even some hosters. Tipping bots became popular on forums, there were tutorials for old people on how to use bitcoin on TV and in the newspapers even, etc. Now? I don't know a single business I use that offers bitcoin payments. All of them have removed it again. Bitcoin's actual value as currency has gone down massively. Yes, it is used. A lot, even. But not as day-to-day currency.
• AznHisoka 9y ago
  And I'm investing in Bitcoin. Just because it is at its peak doesn't mean it can't go even higher! I might be crazy, but your perspective isn't any more rational than mine :)
  • s73ver 9y ago
    Isn't that the problem, though? Bitcoin was supposed to be a medium of exchange. Cash for the internet, in other words. Investing means that people really aren't going to be doing that, and it's just going to sit on a dusty flash drive on the shelf.
    • rothbardrand 9y ago
      Not in the least. Bitcoin has many uses, and is a fundamentally new technology. Naturally it's going thru the technology adoption life cycle and every few months/years it catches up to the wider levels of adoption and more mature use cases. It will become a currency when most of it has been mined and it's in widespread use and there aren't billions of people who have never heard of it... the price will stabilize then. It's an error to think that the only use of bitcoin is as a currency. (in the traditional sense)
      • mrep 9y ago
        > Bitcoin has many uses, and is a fundamentally new technology. Naturally it's going thru the technology adoption life cycle and every few months/years it catches up to the wider levels of adoption and more mature use cases. I have literally only seen one use case where it makes more sense to use bitcoin than to use traditional currency exchanges and that is illegal markets. The downsides (hard to use, one way transactions, high transfer costs due to low block size, super easy to get hacked and lose all your money...) all massively decrease it's value over traditional currencies. Illegal markets only put up with all of those downsides because companies/governments have specifically made it harder for illegal transactions to take place over traditional currencies.
        • 9y ago
• onewaystreet 9y ago
  Just in the past three months bitcoin has gone from $1500 to $3000 to $2500 to $1800 to $2900 to $2500 to $3400. You'd make more with a lot less risk just waiting for a dip and buying.
  • dsacco 9y ago
    That volatility is perfect for a mean reversion strategy.
    • adjkant 9y ago
      I've been testing this out over the past 6 days with $500 to see how it would actually work while keeping my current amount in. I've been working a bit more on the micro level, but it still is pretty consistent in its volatility (lol). So far I have a 4.6% total return on trying to capitalize on the volatility. That's much less than if I had just held at the original buy. I'm going to keep doing it though to see how it works in long term flat and drop periods. When you hold yourself to rules, it also decreases maximum losses too. I see the strategy as a great way to make safe money relative to crypto. Right now if the volatility and my returns hold for even just two years, it could be going from $500 to over 100K. It makes it really tempting not to increase the amount I'm playing with even slightly, but I have yet to see how the strategy fares on long term drops. I do have confidence it will perform well on long term flat periods though.
      • dsacco 9y ago
        A few notes on your comment here...keep in mind none of this is intended to be patronizing, in case my tone comes across that way. I just like talking about this. > So far I have a 4.6% total return on trying to capitalize on the volatility. That's much less than if I had just held at the original buy. If you compare the returns between those two strategies (buy and hold vs mean reversion), make sure you include comparisons of their beta profiles. Their risk measures are going to be very different. > When you hold yourself to rules, it also decreases maximum losses too. Speaking of rules, do you have a maximum tolerable drawdown for the strategy, or a number of consecutive losses at which you stop loss or retire the strategy? In order to add more rigor to your work (and so you know there is an element of empirical strategy here instead of just luck), you should conceive a set of priors for the strategy that allow you to set a hypothetical win rate. If you deviate too far from the win rate, or too far from a drawdown as mandated by your risk management rules, you should shut down the algorithm pending a review of its inputs and retire it if it's no longer working. > Right now if the volatility and my returns hold for even just two years, it could be going from $500 to over 100K. There are a few hypotheses implicit to your thought here: 1. Market volatility for the target cryptocurrency will remain functionally stable for the next two years, 2. Your strategy will remain functionally stable for the next two years, 3. There is sufficient liquidity to allow you to continually compound your trading strategy's assets with its returns for the next two years, from an initial outlay of $500 to over $100,000, without hitting capital constraints along the way. Those are all testable hypotheses (which, technically, you're involved in doing), and I can't tell you if they're realistic. I wouldn't count on all three of them being correct though.
• ojr 9y ago
  The money from bitcoin is coming from the liquidation of the current economy (stocks, bonds, dollars), go long on the US dollar rather than short bitcoin, your sentiment analysis for cryptocurrency does not match the market
• deleted 9y ago
  [deleted]
• pjc50 9y ago
  My predictions are: - craziness is only going to increase: people have realised they can create money out of thin air with an ICO, or fork of an existing coin - authorities will take a while to catch up and make arrests - a lot of people will be taken for suckers - crypto prices will continue to rise, including both halves of the bitcoin fork - I'm not going anywhere near this madness
• eternalvision 9y ago
  Managing risk is all that matters. Have a plan to manage the trade if you're wrong.
• solotronics 9y ago
  the financial past is littered with the corpses of BTC shorts. Something to consider is that most of the ICO buyers would prefer to exit to BTC rather than exit to fiat currency. Possibly an ICO crash would make BTC go even higher. Actually, short BTC please.. I need more fuel for my long position :]
  • foepys 9y ago
    > the financial past is littered with the corpses of BTC shorts. It's also littered with the corpses of "very good investments" that will "make you rich quick". Without any securities standing behind Bitcoin but the promise that it will go higher, it comes down to gambling. Everybody hopes that another fool will come around and pay more than they did before. Bitcoin represents nothing but a currently 150GB large database of transactions. There are no machines (that are useful outside of Bitcoin), no IP, just a few million hashsums on a lot of computers.
    • solotronics 9y ago
      It takes some understanding of how the pieces fit together as a whole but Bitcoin is really the first distributed system of trust. Its a new idea but there it is the first digital thing that is unable to be forged and therefore it creates a system where you don't have to trust a counter party. It combines the following to achieve this [ hashing algorithms as proof of work, public key cryptography, solution for byzantine generals, game theory incentives to secure network and transactions ] The result is something that is both digital and scarce so it is a novel way to store value digitally.
• snappyTertle 9y ago
  Short BTC because there's a bubble in ICOs from tokens built on top of ETH?
• TACIXAT 9y ago
  Heads up. Bitcoin is likely to be forever deflationary until it fails. There are no capital controls to increase the supply which means as people lose their wallets it becomes more and more constrained. I agree that it's a trash fire that will never be adopted as a regular currency, but its value could go up for a very long time like any collectible.
  • joosters 9y ago
    The number of bitcoins recently doubled as it forked. The 'scarcity' of digital currency is a myth.
    • corysama 9y ago
      There have been hundreds of forks that went nowhere because no one cared about them. Litecoin did well. Dogecoin was so absurd it surprisingly didn't die on the vine. Bitcoin Cash was a high-visibility fork that was expected to fizzle out. It still is, but it's being propped up by some number of factors. The point is that cryptos' values are based on widespread long term confidence. That is something that can be replicated. But, it's not as easy as hitting [fork this repo] on GitHub. At least 900 fizzled forks have demonstrated that.
• empath75 9y ago
  I'm starting to think that bitcoin is going to grow until it puts the world economy at risk.
• gremlinsinc 9y ago
  Bitcoin is deflationary...meaniing there's a set limit that can be minted... once that limit is reached...all coins traded will be ones that are already in circulation--meaning there will be presumably higher demand, because of this, some are expecting BTC to go > 25k at some point in the future.
  • clarky07 9y ago
    Technically it isn't yet. It is still inflationary for the next 100 years or so. It is currently making less and less over time, but it is in fact still making more than there are now. Eventually it will be deflationary though.
  • NumberCruncher 9y ago
    >> meaning there's a set limit that can be minted Except the fact that anybody can start his own cryptocurrency and therefore there is no upper limit.
• davidgerard 9y ago
  The trouble with shorting it is that shorting turns out to require a complicated structure to exist. Else you can do margin trading on a single exchange, but the actual margin trading bit is not very regulated at all.
• cwkoss 9y ago
  Make sure you have enough margin that you aren't wiped out by a quick spike up.