Topic: Shorting Bitcoins? (Read 1763 times)
Well we broke $70, $60 already seems like it was a long time ago!
MtGox could really use this feature
caVirtex is planning on adding this feature.
Also, CampBX can execute advanced trades and margin.
Not today. Their site has had that teaser since it launched more than a year and a half ago, but they currently do not have the margin trading, stop loss feature, etc. Because they do accept deposits of USD funds through Dwolla there is one technique that some use to gain leverage for trading bitcoins. Dwolla Instant is a method in which Dwolla provides a loan of up to $500:
- http://help.dwolla.com/customer/portal/articles/433827-instant-faq
While hopefully this access to credit isn't being used to speculate by those who would not be able to afford the losses should the exchange rate move unfavorably for that speculator, it does become a tool allowing a trader to short in an alternate way.
There is demand for "dollar loans" in which bitcoins are the transactional currency but the loan agreement specifies payment of interest and the return of principal to be calculated in terms of dollars. So by taking a USD loan through Dwolla Instant, buying bitcoins with those borrowed funds and then lending them out to a borrower at a higher interest rate then that person is in effect shorting bitcoins using leverage. If the speculator is correct and the exchange rate drops by the time repayment of the loan occurs, there will be a net positive balance of bitcoins after settling (repayment) of the Dwolla USD loan. Of course, there is risk of default by the borrower so this method of shorting should only be considered by those with experience in lending.
MtGox could really use this feature
Thanks for the advice! I'll definitely check these options out.
to make a market more efficient, there must be shorts to keep supply when demand goes crazy. There are lots of reasons that demand is outstripping supply right now, but will those reasons change in the next two months? I don't think so.
Alternately, slide over to BTCjam.com.
To go long on BTC, take a loan and tie it to the BTC/USD exchange rate. Wait for it to rise and pay back the loan. Keep the difference.
To go short on BTC, take a loan and don't tie it to an exchange rate. Transfer it to CampBx and sell it. Buy it back at the lower price, ship it back to BTCjam, and pay back the loan. Keep the difference.
As a BTC investor, I kindly ask you to keep enough to cover if the exchange rate moves in the wrong direction.
Elizabeth
To go long on BTC, take a loan and tie it to the BTC/USD exchange rate. Wait for it to rise and pay back the loan. Keep the difference.
To go short on BTC, take a loan and don't tie it to an exchange rate. Transfer it to CampBx and sell it. Buy it back at the lower price, ship it back to BTCjam, and pay back the loan. Keep the difference.
As a BTC investor, I kindly ask you to keep enough to cover if the exchange rate moves in the wrong direction.
Elizabeth
Is there a way to short sell bitcoins? I mean, is there a mechanism set up for me to be that their value will decrease?
There are some suggestions here:
You can sell BTC/USD futures contracts on ICBIT.se, with leverage up to 10X (actually significantly higher, depends on each contract)
- http://www.ICBIT.se
Another form of shorting bitcoins is to buy PUT options on MPOE. Or the trading methods offered through 1Broker provide a way to go short.
None of those are offered from a financial institution in the U.S. That might cause some to see the counterparty risk as being unacceptably high.
CoinSetter could be the first U.S.-based organization to offer methods to go short. Kraken is another. Neither is open to the public yet.
There are other methods coming as well.
When they arrive, they will be added to the list here:
- http://en.bitcoin.it/wiki/Trade#Financial
- http://www.ICBIT.se
Another form of shorting bitcoins is to buy PUT options on MPOE. Or the trading methods offered through 1Broker provide a way to go short.
None of those are offered from a financial institution in the U.S. That might cause some to see the counterparty risk as being unacceptably high.
CoinSetter could be the first U.S.-based organization to offer methods to go short. Kraken is another. Neither is open to the public yet.
There are other methods coming as well.
When they arrive, they will be added to the list here:
- http://en.bitcoin.it/wiki/Trade#Financial
Seeing as how it looks like bitcoin is booming now (probably on track to break $60 USD by the end of the day), this got me thinking...
Is there a way to short sell bitcoins? I mean, is there a mechanism set up for me to be that their value will decrease?
I'm not saying I'm ready to make a bet one way or the other. I'm still digging through the technical details of how all this works and getting a handle on how the market moves because I like to know as much as I can before I move money. I'm just wondering if the exchanges have this kind of thing set up yet.
Is there a way to short sell bitcoins? I mean, is there a mechanism set up for me to be that their value will decrease?
I'm not saying I'm ready to make a bet one way or the other. I'm still digging through the technical details of how all this works and getting a handle on how the market moves because I like to know as much as I can before I move money. I'm just wondering if the exchanges have this kind of thing set up yet.
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