The options to short bitcoin are mostly through unregulated exchanges, and very risky given bitcoin’s volatility. ” Margin Trading Another common way to short bitcoin is through margin trading, which allows investors to borrow the cryptocurrency from a broker to make the trade. But for those daring enough to try, there are ways to bet against bitcoin’s rise. Short Sell The Bitcoin Investment Trust This option may seem like the easiest and most obvious choice for stock traders, but in reality, it’s more difficult than it seems. “There’s pretty good liquidity for shorting bitcoin. If another user comes along and accepts a wager that bitcoin prices will fall, users could potentially profit if they win the bet. Predictions market Predictious claims to be “the premier Bitcoin prediction market. Futures Contracts The futures market isn’t as widely developed as CFDs and margin trading, but it’s still possible to make bearish bets on bitcoin with options. Despite some bumps in the road, digital currency bitcoin made a major recovery off of Friday’s lows, gaining back more than $1,000 in price. “All the options to short in common markets are becoming available in the bitcoin market,” said Charles Hayter, co-founder of market tracker CryptoCompare. Cryptocurrency Margin Trading Bitcoin exchanges such as BitMex, AVAtrade and Plus500 allow margin trading, which lets traders to sell bitcoin short on margin. The trade goes both ways; a trader can also increase their long or short position through leverage.
Of course, margin fees and leverage could also play a major role in this approach as well. Not to mention it hasn’t exactly been a good year for bitcoin bears given the 10-fold surge in price. Depending on the funds kept as collateral to pay back the debt, this option increases the already risky bitcoin trade. This will be a less risky way to bet bitcoin prices will fall. Of course, futures contract sellers must first own the bitcoin that they agree to sell and they re obligated to sell at the specified price no matter how profitable or unprofitable the contract ends up. Bitcoin’s assault on $10,000 has stirred bears who see fresh evidence of a bubble. For now, LedgerX is the only regulated exchange and clearing agent for cryptocurrency options in the U. Sell Futures Contracts Traders looking to bet on a bitcoin sell-off can go to bitcoin futures markets such as OrderBook. However, for traders still skeptical of the cryptocurrency’s astronomical gains in the past several years, here are four ways to profit off of a potential bursting bitcoin bubble. Borrow to Short Bitcoin Most of the brokerages that allow margin trading will also let clients borrow bitcoin to short with no leverage. For Customers EMEA+44 20 7330 7500 Asia Pacific+65 6212 1000 MENU By November 27, 2017, 2:31 PM EST Bloombergâs Joe Weisenthal takes a look at bitcoinâs surge toward $10,000. There are ways to bet on a crash, but they’re even riskier than trading the cryptocurrency on the way up.
Bitfinex, one of the biggest cryptocurrency exchanges, requires initial equity of 30 percent of the position. Since the Bitcoin Investment Trust (OTC: GBTC) trades on the OTC Market rather than a major exchange, many major online brokerages don’t allow it to be sold short. It’s a contract between the client and the broker, where the buyer and seller of the CFD agree to settle any rise or drop in prices in cash on the contract date.Zcash.. Short-margin trading positions on Bitfinex were at around 19,188 bitcoins on Monday, versus 23,931 long positions, according to bfxdata. The risk is that these notes don’t always trade in line with bitcoin, so the exposure won’t be perfect. and the Chicago Board Options Exchange have both asked for approval to list bitcoin futures, so that may open up the market to more investors. ” Contracts for Difference One of the most popular ways to short bitcoin is through CFDs, a derivative that mirrors the movements of the asset. “The break could push the price well above $10,100 and it would be in that area when we could see some retracement. The main difference with shorting the Nasdaq for example, is it will be a lot more volatile, so there’s a lot more risk. The rate to borrow will also be a bit higher. Bitcoin Predictions Market Prediction markets are very thinly-veiled online gambling sites that allow users to create their own personal wagers. .