5 ms·

How does one take a short position in Bitcoin?

9935c101ab17a66 9y ago
I think that's derriz's point. It's very difficult, and would be prohibitive for a small business to immediately convert bitcoin to cash.
- juicyfroot 9y ago
  Bitcoin Cash
hueving 9y ago
Very soon (next week) bitcoin futures will start trading which will be an easy legitimate way to take a short position. You just need a futures account which you can get from regular financial institutions.
malloryerik 9y ago
If the futures markets at the CBOT or CME attract volume, you could use those. Otherwise, you'd have to do it over-the-counter. Borrow a bitcoin from someone and turn it into real money. When you have to repay, if BTC is down, you'll buy back a BTC at a profit. If it's up, you'll have to buy back at a loss. Note that this gives you a maximum gain of whatever BTC/USD is today (assuming you denominate in greenbacks), while upside risk is theoretically unlimited. Of course the lender has to trust or be ensured (or insured) that you will repay. There must be people using Ethereum contracts to make options on BTC, and maybe trying to minimize counterparty risk through the judicious use of open-sourced smart contracts and digital collateral? Anyone know of interesting cases?
- totalZero 9y ago
  http://www.cmegroup.com/trading/bitcoin-futures.html http://www.cmegroup.com/trading/bitcoin-futures.html http://cfe.cboe.com/cfe-products/xbt-cboe-bitcoin-futures http://cfe.cboe.com/cfe-products/xbt-cboe-bitcoin-futures Apparently they will list on 18 Dec on CME, and 10 Dec on CBOE. I get the feeling that there will be a fair bit of selling pressure as a result. That's usually the case on lockup expiries and it would make sense for the initiation of a volatile instrument that wasn't previously shortable on a listed basis. I wonder how hedging transactions will affect the mechanics of the bitcoin market.
  - ForHackernews 9y ago
    > I wonder how hedging transactions will affect the mechanics of the bitcoin market. The bitcoin market is astonishingly shallow compared to most commodities and nearly unregulated, I assume hedge funds and other smart money can and will manipulate the price up and down to their own advantage.
    - speedplane 9y ago
      Why would it be particularly easier to manipulate bitcoin pricing over other stocks/securities? Simply because the authorities don't understand it yet, or something to do with the nature of crypto-currency itself?
      - ForHackernews 9y ago
        Because there are relatively few buyers and sellers in the market and the amounts of transactions are small, so one big mover can shift the price a lot. According to some blockchain site[0] the average transaction volume for BTC is something like $2.25m USD equivalent For comparison, on an average day, SPY[1], which is just one security (albeit a popular one) trades something around $17,160m (e.g. $17.16b). [0] https://blockchain.info/charts/estimated-transaction-volume-usd?daysAverageString=7 https://blockchain.info/charts/estimated-transaction-volume-... [1] https://finance.yahoo.com/quote/SPY https://finance.yahoo.com/quote/SPY
        speedplane 9y ago
        Couldn't you say the same about penny stocks? And won't this problem go away as BTC gets more popular?
        ForHackernews 9y ago
        > Couldn't you say the same about penny stocks? Sure, but there are also laws and regulations that limit what you can do with stocks on a real exchange: https://en.wikipedia.org/wiki/Microcap_stock_fraud https://en.wikipedia.org/wiki/Microcap_stock_fraud > won't this problem go away as BTC gets more popular? Maybe. It would have to get a lot more popular, and a lot more legitimate and regulated. At that point, it's lost all the cyberpunk appeal, and it's just another speculative asset.
- LsDmT 9y ago
  What you mean? You can short any crypto currency on many exchanges. Bitfinex and GDAX being the biggest right now.
  - tehlike 9y ago
    It would take some gut to do it.
  - ForHackernews 9y ago
    And when bitcoin crashes, and the exchange "gets hacked", goes bankrupt, and the owners run away to some international destination, who do you claim your USD back from?
    - tomkarlo 9y ago
      If you're shorting, you get the $ up front and have to supply the security when you "cover". Not having to "cover" the short would actually be better.
tim333 9y ago
IG will do it sometimes. (https://www.ig.com/au/forex/markets-forex/bitcoin-1 https://www.ig.com/au/forex/markets-forex/bitcoin-1)
conception 9y ago
Most major exchanges offer margin trading.
topmonk 9y ago
Bitfinex offers this.
alanfalcon 9y ago
Whaleclub
wpietri 9y ago
I have the same thought myself sometimes, but then I remember this quote: "Markets can remain irrational a lot longer than you and I can remain solvent."
fapjacks 9y ago
You can lie to an exchange that supports it. Sign the paperwork making promises about things that aren't true.

I think that's derriz's point. It's very difficult, and would be prohibitive for a small business to immediately convert bitcoin to cash.

juicyfroot 9y ago
Bitcoin Cash

hueving 9y ago

Very soon (next week) bitcoin futures will start trading which will be an easy legitimate way to take a short position. You just need a futures account which you can get from regular financial institutions.

malloryerik 9y ago

If the futures markets at the CBOT or CME attract volume, you could use those. Otherwise, you'd have to do it over-the-counter. Borrow a bitcoin from someone and turn it into real money. When you have to repay, if BTC is down, you'll buy back a BTC at a profit. If it's up, you'll have to buy back at a loss. Note that this gives you a maximum gain of whatever BTC/USD is today (assuming you denominate in greenbacks), while upside risk is theoretically unlimited. Of course the lender has to trust or be ensured (or insured) that you will repay. There must be people using Ethereum contracts to make options on BTC, and maybe trying to minimize counterparty risk through the judicious use of open-sourced smart contracts and digital collateral? Anyone know of interesting cases?

totalZero 9y ago
http://www.cmegroup.com/trading/bitcoin-futures.html http://www.cmegroup.com/trading/bitcoin-futures.html http://cfe.cboe.com/cfe-products/xbt-cboe-bitcoin-futures http://cfe.cboe.com/cfe-products/xbt-cboe-bitcoin-futures Apparently they will list on 18 Dec on CME, and 10 Dec on CBOE. I get the feeling that there will be a fair bit of selling pressure as a result. That's usually the case on lockup expiries and it would make sense for the initiation of a volatile instrument that wasn't previously shortable on a listed basis. I wonder how hedging transactions will affect the mechanics of the bitcoin market.
- ForHackernews 9y ago
  > I wonder how hedging transactions will affect the mechanics of the bitcoin market. The bitcoin market is astonishingly shallow compared to most commodities and nearly unregulated, I assume hedge funds and other smart money can and will manipulate the price up and down to their own advantage.
  - speedplane 9y ago
    Why would it be particularly easier to manipulate bitcoin pricing over other stocks/securities? Simply because the authorities don't understand it yet, or something to do with the nature of crypto-currency itself?
    - ForHackernews 9y ago
      Because there are relatively few buyers and sellers in the market and the amounts of transactions are small, so one big mover can shift the price a lot. According to some blockchain site[0] the average transaction volume for BTC is something like $2.25m USD equivalent For comparison, on an average day, SPY[1], which is just one security (albeit a popular one) trades something around $17,160m (e.g. $17.16b). [0] https://blockchain.info/charts/estimated-transaction-volume-usd?daysAverageString=7 https://blockchain.info/charts/estimated-transaction-volume-... [1] https://finance.yahoo.com/quote/SPY https://finance.yahoo.com/quote/SPY
      - speedplane 9y ago
        Couldn't you say the same about penny stocks? And won't this problem go away as BTC gets more popular?
        ForHackernews 9y ago
        > Couldn't you say the same about penny stocks? Sure, but there are also laws and regulations that limit what you can do with stocks on a real exchange: https://en.wikipedia.org/wiki/Microcap_stock_fraud https://en.wikipedia.org/wiki/Microcap_stock_fraud > won't this problem go away as BTC gets more popular? Maybe. It would have to get a lot more popular, and a lot more legitimate and regulated. At that point, it's lost all the cyberpunk appeal, and it's just another speculative asset.
LsDmT 9y ago
What you mean? You can short any crypto currency on many exchanges. Bitfinex and GDAX being the biggest right now.
- tehlike 9y ago
  It would take some gut to do it.
- ForHackernews 9y ago
  And when bitcoin crashes, and the exchange "gets hacked", goes bankrupt, and the owners run away to some international destination, who do you claim your USD back from?
  - tomkarlo 9y ago
    If you're shorting, you get the $ up front and have to supply the security when you "cover". Not having to "cover" the short would actually be better.

tim333 9y ago

IG will do it sometimes. (https://www.ig.com/au/forex/markets-forex/bitcoin-1 https://www.ig.com/au/forex/markets-forex/bitcoin-1)

conception 9y ago

Most major exchanges offer margin trading.

topmonk 9y ago

Bitfinex offers this.

alanfalcon 9y ago

Whaleclub

wpietri 9y ago

I have the same thought myself sometimes, but then I remember this quote: "Markets can remain irrational a lot longer than you and I can remain solvent."

fapjacks 9y ago

You can lie to an exchange that supports it. Sign the paperwork making promises about things that aren't true.