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Author Topic: Shorting BTC  (Read 123 times)
jubalix
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December 05, 2017, 06:08:48 PM
Last edit: December 06, 2017, 01:34:11 PM by jubalix
 #1

Can someone run through how they see shorting BTC will work.

An I mean the mechanics of it, not that "I can short this" but how will it actually happen

[1] Say bob is a miner, he sells a contract for future bitcoin at $10K USD because thats the minimum he needs to make a profit to pay of mining equipment. The market price is now say $14K, but bob wants to hedge his bets. If the bitcoin is sold at 10K in the future how does this short the market, because as of yet no bitcoin has been sold or made. Come the delivery date if the price is 20K then the buyer can sell onto the market for 20K all the way down to 10K for a profit.

[A] there are 3 problems, with this mining is  <<<< volume than daily volume.

[B.] I don't think any miner would sell like this or not a significant proportion of them to have any effect.

[C] I don't think a miner would honour the contract, and you could not force him to. So it would a make a futures contact worthless any way

[D] As far as I can tell, people who want to short must take delivery of BTC, otherwise they fail on delivery when contract falls due or roll over, so it looks like the whole futures market will not be rigable as per usual.

[2] If I have 1 btc now and I want to ensure my price sell a contract for 3 month in the future at market price the shorter can not win by a price loss or force the price down, they must pay me agreed price in 3 months, even if the price has gone down so they support the markter. If the market goes up they can only sell down to the buy price (plus inflation). So they don't seem to be able to "short beyond any by price".

[E] How does the buyer enforce delivery in 3 months? Escrow, then whats the point of not selling at market rate now and taking the FIAT?


For things like crops where there can be overproduction better wether worse wether ok futures may work to hedge risk. But BTC has  know money supply that cannot be varied any more than a few %

It seems to me BTC is going to kill of all the FIAT and FIAT traders in futures who really don't understand what they are dealing with.


Any way if some one can run through this would be great

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December 05, 2017, 07:31:32 PM
 #2

I'm thinking shorting bitcoin will be a risky venture to embark on except if one has a very good source of information that would inebriate the person to short especially with the fundamental source rather than technicals. As we know that technicals only obeys fundamentals.

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December 05, 2017, 08:36:06 PM
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I'm thinking shorting bitcoin will be a risky venture to embark on except if one has a very good source of information that would inebriate the person to short especially with the fundamental source rather than technicals. As we know that technicals only obeys fundamentals.

Inebriate the person? What are we getting drunk of shorting things now Cheesy. Well I would imagine we aren't shorting for no reason but are using some logical and valid reasoning for our shorting. This can be done through TA, PA, and or how the market sentiment is. The first two are easier to measure because they are more proven and based off numbers whereas the last one is tough and can be anecdotal sometimes and harder to measure.
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December 05, 2017, 08:43:09 PM
 #4

To want to short bitcoin, you have to watch the movie "the big short" ahah
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December 05, 2017, 08:47:18 PM
 #5

It will work.Works better if you can find any exchange which allows margin trading
Just follow the news..just one major negative news will make the bitcoin price go down ..go ahead and short bitcoin the moment you see a negative sentiment.
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December 05, 2017, 09:36:27 PM
 #6

Good - short all the way down as it long as it pleases you. I can't wait for the launching of futures market to amplify BTC volatility so I could BUY and HODL more when there is a bloodbath!

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BillCoin
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December 05, 2017, 10:03:19 PM
 #7

Can some run through how they see shorting BTC will work.

As far as I can tell, people who want to short must take delivery of BTC, otherwise they fail on delivery when contract falls due or roll over, so it looks like the whole futures market will not be rigable as per usual.


Any way if some one can run through this would be great

The whole thing that I am afraid that is going to happen, is that the big organization is going to short bitcoin through the future contracts markets, and after the fill up enough shorts, they will manipulate the bitcoin market or will just sell huge loads of bitcoin, so they won't only earn from selling the bitcoins( selling at high price and then buying on a lower price), they are also going  to earn huge loads of money from the future contracts as they filled large amount of shorts.

The fact that CME enables bitcoin future cotnracts is a very risky thing to the bitcoin price which makes investing in bitcoin even more risky.
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December 05, 2017, 10:08:44 PM
 #8

Someone who trades gold or precious metals might best be equipped to answer this. Crypto trading is more similar to trading precious metals than trading stocks or bonds. With crypto and precious metals, there is no P/E (price earnings) metric which can make it more difficult to quantify if something is overvalued or undervalued. The best opportunity for shorting bitcoin is probably under circumstances where it is significantly overvalued or if someone has insider knowledge and knows when a massive sell off is coming.

As bitcoin expands and is accepted in more countries, its price could stabilize similar to gold/silver. Volatility could fall off sharply in the face of no earnings projections, conference calls, quarterly profits and other tenets which define volatile price movements in the stock market. Gradually unknowns associated with volatile crypto phenomena such as forks will better known, and their effect on crypto's price will become less pronounced.

All in all, I think bitcoin trading will come to resemble gold/precious metals low volatility as time passes, especially if it becomes more officially endorsed with things like ETF's having a green light.

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