He is borrowing BTC at a huge interest rate. The argument goes: if that BTC is being put to any real-world use its implicitly being converted to fiat first. So he has loans denominated in BTC and assets in something else. Therefore if BTC goes down (relative to those other assets) he profits ergo he is "short". If he was "long" on BTC he'd be borrowing the USD (mortgage home, and so on etc) and buying BTC.
All of this assumes he's speculating in the market.
Other activities would make his "short" vs. "long" irrelevant
1. Ponzi
2. "Hard money": providing line-of-BTC-credit to places that are very unlikely to need it (gambling houses)
3. SR randomizer (or other service)
4. Some kind of money laundering (he doesn't need the BTC, he needs the individuals and loan transactions to provide cover)
I feel that it all comes down to: Why he would be continuing to use depositor's money at these rates instead of securing loans in fiat?
All the theories proposing legitimate and reasonable risk business models fail to answer that question.
Topic: Why Pirate is a Bear (at the moment) (Read 808 times)
I still don't get why people believe pirate is short in any significant way.
I too can't make much sense of it.
He has to pay back his liabilities in BTC, thats true. So from week to week he has to pay less when prices are lower then the week before that.
BUT:
When he wants to cash out (lender's funds or own profits) he will get most for his BTCs if prices are high.
He also seemed to have caused the unprofitable sell offs in the last 2 weeks in order to keep prices down. So why would he do that if he is richest when prices are up?
The only way I see to solve this dilemma is that he may want to drive prices down as long as he accumulates bitcoin for his operation and has to pay out dividends to lenders and once we get closer to cash out day, he will encourage rallies to gain maximum profits for his sell out.
Clonclusion: We are still in accumulation phase. Expect Pirate powered rally mode and keep an eye out for him pushing prices up and will see his final cash out soon thereafter.
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