Short selling bitcoins, synthetically with litecoin
There are few credit facilities with bitcoin, making borrowing bitcoin to buy it back later (at a lower price) nearly impossible. Also all of the places that would or claim to allow one to go bearish on bitcoin - whether short or with options or futures - are very illiquid, there is nobody there to trade with. I noticed that it could be possible to short bitcoin with litecoin (ltc). It is really a pair trade based on the convergence and divergence of the two currency's prices, and can be executed on the exchanges Vircunex and BTC-E lets say LTC/BTC = .006 , where one could sell 1 litecoin for .006 bitcoins. litecoin prices in USD are $.43 per coin, bitcoin prices are $70 per coin $.43/$70 = $.0062 Bitcoin and litecoin prices have diverged from their pricing against a basket of currencies (USD and EU). Assuming these currencies were to converge again, then litecoin's ratio against bitcoin will increase as bitcoin decreases in USD. (Letting one sell their litecoins at a profit, for bitcoins at a lower price) Anyone wanting to short bitcoin can buy litecoin and wait for a pullback in bitcoin prices. The advantages of this against actual short selling bitcoin is that mathematically, short selling has an unlimited risk. In a pair convergence trade, your maximum loss is zero if litecoin is decided to be worthless. The pair can keep divergence, as in, bitcoin can continue increasing in value and litecoin can continue decreasing in value. Many people have their doubts about bitcoin's continuous surge in pricing, despite the mismanagement of fiat currencies. This will enable people to act on those sentiments and short bitcoin, synthetically. EDIT: despite USD price correction, the litecoins I bought for .006 bitcoins are now .02 bitcoins each, representing a 3x gain in bitcoins. Allowing me to buy bitcoins low, as I hoped. As always though, the currency pairs could converge.
I cashed into BTC and ETH late January of this year. I underestimated the bottom, and needless to say, my portfolio hasn't shown any return yet. I've HODLed everything I have so far. BTC's technicals look like it didn't penetrate the $10k resistance price and dropped from around $8k as of late, so if it does go up, it won't be anytime soon. It dropped 10 points by the time I finished this paragraph. I figured I can take advantage of the bear market. Does anyone know an institution/exchange where I can short sell BTC? Ideally I want a list of some good ones to look into and consider other factors. If so, what are the prerequisites to short sell and how soon would I expect a margin call? Any input is appreciated. Thanks in advance.
[uncensored-r/BitcoinMarkets] Naked Short Selling Bitcoin
The following post by Murda314 is being replicated because the post has been silently removed. The original post can be found(in censored form) at this link: np.reddit.com/ BitcoinMarkets/comments/7gw9nt The original post's content was as follows:
Ok guys - so the thing that's got me concerned right now with all this futures business is naked shorting of bitcoin. On the one hand, the establishment of a futures market could be a gigantic boost to the overall marketcap and legitimacy of the crypto space. ON THE OTHER HAND, papering over asset prices via naked shorting and price manipulation is EXACTLY how the powers that be control the price of Gold, Silver, etc. My question is, can they do this same thing with bitcoin? Does bitcoin have any technical capabilities that might allow it to evade capture and death by fiat? How do we fight if Wall St. et.al decide to naked short the hell out of the BTC market? I know we're over $300B now but that is peanuts to the major financial institutions? Appreciate any information/thoughts you guys have. What a wild week!!
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How To Short Bitcoin ($BTC) Using BitMEX - Profit In A Bear Market - Crypto 101
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