When it comes to shorting Bitcoin one must mention Pirate and his huge BTC short position. Of course he defaulted on his contracts when the short squeeze was applied.
Hint: To those long on Bitcoin. Take delivery.
Hint: To those long on Bitcoin. Take delivery.
I thought long bitcoin always means delivery, otherwise you are just long some one's bitcoin denominated promissory note? Not like dollar, since all dollars in banks are FDIC insured, and implicit backed by federal reserve (if banks could not use their asset to secure loan from market, then federal reserve will take the asset as collateral and issue loans), so all dollars in banks are dollars, not some chase dollar note or citi dollar note.
Most people who long bitcoin with Pirate are just long pirateBTC note, which probably should be rated as a junk note with grade C, his note should be less than 1 BTC if correctly priced,so by entering the price on par (pay 1BTC to get pirateBTC), you are already losing money before he defaulted,
Of course the creditworthiness of the shorts is critical here; however this is closely related to the market. Pirate is the perfect example. When the BTC / USD rate was falling at a rate greater than 7% a week as was the case in the fall of 2011 Pirate had no problem meeting his obligations and his notes were good, it is when the market turned in 2012 that the short squeeze was applied and this massive short defaulted. The Pirate investors who took delivery ahead of the default and squeezed the short made money.
The sure way for the longs to squeeze the shorts is to take delivery and this works in any market.
