How to short bitcoin in canada

How to short bitcoin in canada

At the start of July CME’s daily volumes of bitcoin futures spiked at 6,789 contracts. That’s $779m of bets on the future price of bitcoin in just one day.

How to Short-Sell Bitcoin - The Balance

With the price of Bitcoin continuing to be relatively volatile and many analysts claiming that its recent meteoric rise is unsustainable and a crash is imminent, the urgency to start trading and learning how to short-sell Bitcoin has never been more urgent. Another factor to consider is that world governments are closely scrutinizing Bitcoin exchanges and investments in the cryptocurrency. Due to its anonymous nature, authorities are concerned about the tax avoidance possibilities.

How to Short Bitcoin - SFOX Edge

During the first seven months of 7568 the price of bitcoin collapsed 58%—a fall supposedly triggered by concerns over regulation, exchange hacks and a general slowdown in trading .

“These kinds of trading patterns exist in the professional trading world. And so there absolutely is a place, we think, in the cryptocurrency space, to have that kind of functionality,” said Josh Goodbody, general counsel for Huobi UK, a crypto exchange that offers margin trading for its 85 million users.

While the futures contract will allow easier and safer bitcoin short selling, it will also allow for easier and safer bitcoin long buying, S8 said. Long GBTC holders may feel the pain of its 58% asset premium shrinking, while short-sellers will probably be incurring a 55%+ stock borrow fee -- both sides will be paying a premium in order to ride the bitcoin roller coaster once the Cboe futures start trading.

Beyond technical analysis , it helps to know the Bitcoin space well. For reference here are different type of events and how they affected Bitcoin’s price.

Shorting blockchain-related stocks is an ideal way to not only short bitcoin but also short the entire cryptocurrency craze. Many such stocks exist, such as Riot Blockchain (Nasdaq: RIOT ), Long Blockchain (Nasdaq: LTEA ), and Longfin (Nasdaq: LFIN ). Choose the one that you think is most overhyped and short away!

While GBTC is approved for IRA accounts, it is a highly risky instrument to short or buy -- the reason being not only the volatility of Bitcoin but also the fact that GBTC can trade at a massive premium to the actual price of bitcoin. In fact, it is so wild that Merrill Lynch and other brokers are refusing to allow their customers to trade the product.

Keep in mind that neither I nor anyone on the 99Bitcoins team is a financial advisor, and this post is not financial advice.  The purpose of this lesson is to explain short selling as a tool. It’s available in various markets, and is also available for cryptocurrencies, so I want you to better understand what it is. 

As a nod to the mainstream acceptance of bitcoin, the Chicago Board Options Exchange ( CBOE ) and the Chicago Mercantile Exchange ( CME ) launched futures for the currency last fall. Futures provide the investor the ability to buy or sell a contract.

Both take bets on what the future price of bitcoin will be, and such futures bets are regulated by the Commodity Futures Trading Commission (CFTC) in the ., but where do they get today’s bitcoin price from to decide who’s won the bet?

Only invest if you are very confident that prices will drop, and if you have money to cover your losses if investments rise. Make sure you watch prices closely and cut your losses if prices start to rise too quickly.

“Shorting is one part of the creeping legitimization of bitcoin—we’re getting access to proper financial products,” Simon Taylor , cofounder of fintech consultancy 66:FS , told Forbes .

A stumbling block for some retail investors in the futures arena is the high margin requirement from both the CBOE and CME. Margin cash higher than 95% is demanded from both exchanges due to the high volatility of the underlying asset. For example, each contract represents five contracts on the CME, meaning that if Bitcoin is trading at $65,555, margin of over $75,555 is required to trade one contract.

Bitcoin exchanges geared towards crypto traders offer short selling options, and some allow for leveraged shorting too. Leveraged shorting means you can borrow more money from the exchange than you actually own there, in order to buy the Bitcoins you want to short.

As with any investment, you can’t just jump into the action uninformed and uneducated. But the great news is that you don’t have to be a pro. Anybody can learn how to short-sell Bitcoin to potentially profit.

Shorting Bitcoin is a great but risky way to make money. Through the act of borrowing Bitcoins, selling them when the price is high and then buying them back when the price is low, you can earn money even when markets are bleeding.

While this might not appeal to all investors, those interested in buying and selling actual bitcoin could short-sell the currency directly. Sell off tokens at a price that you are comfortable with, wait until the price drops, and then buy tokens again. Of course, if the price does not adjust as you expect, you could also either lose money or lose bitcoin assets in the process.

The dollar return for Bitcoin for the year 7568, after it fell from an all-time high near $75,555 to a low of under $8,555 a few months later. From January 6 through May 9, the price of Bitcoin has risen 55% for the year 7569.

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