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Bitcoin Climbs as Futures Debut Fails to Incite Attack by Shorts

bloomberg.com

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Re: Bitcoin Climbs as Futures Debut Fails to Incite Attack by Shorts

#3

Post by verroq »

You’ve been able to short bitcoin on okcoin, bitfinex, bitmex either via margin or through futures products for years.

Secondly, newly launched futures products will have very thin liquidity due to the lack of market makers. There is no way a short/long position on CME will move the market in a meaningful way for a while.

I wish Bloomberg et al will stop repeating this “you can’t short” meme because it you can and you could for years.

Re: Bitcoin Climbs as Futures Debut Fails to Incite Attack by Shorts

#4

Post by JumpCrisscross »

verroq wrote: post #3

You’ve been able to short bitcoin on okcoin, bitfinex, bitmex either via margin or through futures products for years. Secondly, newly launched futures products will have very thin liquidity due to the lack of market makers. There is no way a short/long position on CME will move the market in a meaningful way for a while. I wish Bloomberg et al will stop repeating this “you can’t short” meme because it you can and yo…

Counterparty risk makes those venues practically useless for shorting. If Bitcoin goes up, you lose on the short. If Bitcoin crashes, the exchanges likely get compromised and you lose on counterparty risk. The only time you "win" is if Bitcoin goes down a little. Those aren't savvy trading parameters.

Re: Bitcoin Climbs as Futures Debut Fails to Incite Attack by Shorts

#8

Post by grandalf »

0003 wrote: post #6
grandalf wrote: post #5

Short term betting (for or against) Bitcoin is unlikely to result in much profit.

It is not so much a directional play as it is a force for arbitrage opportunities.

True, but those arbitrage opportunities will stabilize the price and make other similar opportunities less profitable. I suspect that the real reason these haven't all been ironed out (exploited already) is because Bitcoin exchanges lack the infrastructure guarantee that transactions close when they are expected to, and thus the fee levels wash out much of the arbitrage (for now). But arbitrageurs operating outside the exchanges can use this to their advantage and probably harvest a bit of profit on the chaos for the time being.

Re: Bitcoin Climbs as Futures Debut Fails to Incite Attack by Shorts

#9

Post by verroq »

JumpCrisscross wrote: post #4
verroq wrote: post #3

You’ve been able to short bitcoin on okcoin, bitfinex, bitmex either via margin or through futures products for years. Secondly, newly launched futures products will have very thin liquidity due to the lack of market makers. There is no way a short/long position on CME will move the market in a meaningful way for a while. I wish Bloomberg et al will stop repeating this “you can’t short” meme because it you can and yo…

Counterparty risk makes those venues practically useless for shorting. If Bitcoin goes up, you lose on the short. If Bitcoin crashes, the exchanges likely get compromised and you lose on counterparty risk. The only time you "win" is if Bitcoin goes down a little. Those aren't savvy trading parameters.

If you are short and bitcoin goes up, then you should lose money. That is expected.

If bitcoin price crashes, how does it imply exchanges will become compromised???

Counterparty risk also exists for established exchanges. Secondly I’d venture to say for retail traders, their offerings are vastly inferior to bitfinex/bitmex/okcoin. You get much higher leverage and lower margin requirements. You also don’t pay for quotes or any “access” fees which eat into your margins.

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