On 07/11/13 11:31 AM, Mark Jenkins wrote:
If anyone wants to call it and put some of their own money on the idea
that the market will correct below the current level, there are fancy
short instruments you can acquire. There's a BTC/USD contract for
difference (CFD) available at 1broker.com where they're currently
offering a 0.54% *daily* (not annual!) interest rate to folks going
short to offset the folks going long. (was 0.32% daily for most of the
last week or two). They've got 1-5x leverage if you're feeling extra bear.
...
Perhaps an irony, but the reference currency for going in and out at
that site is bitcoin itself. :) So kind of funny for any going short,
you bring a tiny amount of bitcoin, go short, market crashes below where
you entered, and withdraw more bitcoin then you brought in worth more in
USD then what you brought in....
Retracted. I got this totally wrong. I should of been more careful.
You make a profit in bitcoin terms if you go short @ 1broker if the
price goes down, but not necessarily a profit in USD terms -- it depends
on how far the price moves and amount of leverage you use.
An example, suppose you bought 1 bitcoin at $350 USD/BTC and right away
put it in a 2x leverage short position at 1broker and you take profit
when the price goes down 40%.., you would end up with a profit of 0.40 *
1 * 2 = 0.8 BTC. In bitcoin terms that's a very big profit, but if you
don't wait for the price to recover and you sell all that bitcoin
(principal and profit) then you're looking at only a 1.8*350*0.6-350 -
$28 USD profit overall.
Take the same example and use 1x leverage instead of 2x and you get a
0.4 BTC profit, but in USD terms 1.4*350*0.6 - 350 = -$56 (a loss) if
you cash out both your principal and profit bitcoin.
More often then not, folks who are buying this instrument short at this
particular site would be bitcoin bulls long term and bears short term --
folks who are going to take their profit in bitcoin and hold it there after.
For long term bears wanting to just cash in on a prediction of a big
drop in price from current level, these other contract for difference
(CFD) sites that have Bitcoin vs USD might be more interesting as
they're denominated in USD terms:
http://www.avatrade.com/
http://www.plus500.com/
And from what I'm read, they don't do deposits and withdrawls in bitcoin
(for transaction purposes) either, so not really interesting to me. And
there are deposit minimums, $100 and 100 pounds at the other, no backing
bravado calls with just ~$3 there.
Other bitcoin based sites that I'm looking at for fancy ways to go short
or long are
https://www.bitfinex.com/
https://icbit.se/
http://mpex.co/ by way of https://coinbr.com/
Simplest, low risk way to go short is indeed to just wait. Your entry
price may never hit, but at least you won't lose anything. (other then
opportunity)
If you're serious about entering at a certain point, you may want to
have a buy order already in for that price point -- some opportunities
more slow, others move fast:
Ross Ulbricht being arrested:
http://bitcoincharts.com/charts/bitstampUSD#rg60zig30-minzczsg2013-10-02zeg2013-10-03ztgSzm1g10zm2g25
Here's all the low points from April to early May:
http://bitcoincharts.com/charts/bitstampUSD#rg60zig30-minzczsg2013-04-10zeg2013-05-04ztgSzm1g10zm2g25
And here's Nov 5 through Nov 9, very wild last night:
http://bitcoincharts.com/charts/bitstampUSD#rg1zig15-minzczsg2013-11-05zeg2013-11-09ztgSzm1g10zm2g25
Of course, you have to move money into an exchange to get an order on
the books. One of the fastest ways to do that is to use bitcoin as a
transactional currency. (buy for cash, immediately sell on exchange)
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