Shorting Bitcoin Futures Not Happening. Here’s Why.
According to Fox Business News today there’s very little action so far in shorting Bitcoin futures. And on the scoreboard of Bitcoin futures the CME has posted nearly 1,000 more Bitcoin futures contracts than the CBOE did on their first day. According to Fox Business News, Microsoft and Expedia among other major companies are now accepting Bitcoin for payments which is a whole other reason to explain why Shorting Bitcoin Futures isn’t happening.
For all of the talk of a Bitcoin bubble it’s very encouraging to see shorting Bitcoin futures not happening. Why? Because if all of the Bitcoin critics truly believed there was a Bitcoin bubble – just as they said – then why isn’t there a lot of Bitcoin futures contracts shorting Bitcoin? It’s more than a little interesting that all of these critics — and the public at large — aren’t placing any Bitcoin futures bets on a Bitcoin bubble.
That’s why shorting Bitcoin futures isn’t happening; no one really believes there’s a Bitcoin bubble. If all of those predictors of doomsday really believed what they said then the Bitcoin futures markets would be flooded with contracts shorting the price. But there aren’t any. When the public at large realizes this we see Bitcoin ballooning through that ethereal $20,000 ceiling straight through to $21,000 and beyond — which is the prevailing view among Bitcoin commentators.
With all of this doom and gloom on an imminent Bitcoin bubble why isn’t there any serious volume on shorting Bitcoin futures? Because no one seriously believes it. At least not enough to put their money where their mouth is and execute a contract shorting Bitcoin futures. If a burgeoning Bitcoin bubble is to be believed, where all the profiteers placing their contracts to short Bitcoin? Anyone still sitting on the fence as to whether or not to invest in Bitcoin should take this absence of shorting activity as the best possible sign to proceed.
Shorting Bitcoin is a Bad Bet Because Bitcoin Is Going Nowhere But Up.
If you’re an investor wringing your hands in glee at the chance at shorting bitcoin to make money be prepared to pay up. Bitcoin is on the fast track in transforming world currency and investing markets. If ever there were a Bitcoin bubble that ship has sailed. When China put the screws to most Bitcoin activity on the mainland the price plummeted. Then came back up and hit brand new highs a few days later.
If you’re new to futures trading I strongly suggest you do your research. A lot of it. Shorting Bitcoin will have you reaching for your checkbook to pay the CME or CBOE when your contract comes up and the price puts you on the wrong side of the deal. How wrong? Upside down wrong. Underwater.
In other words you are very probably going to lose money.
Crypto Capers’ founder Howard Sherman covered Bitcoin futures but he only scratched the surface.
To understand why take this crash course on the futures markets and then we’ll continue.
Since Bitcoin pricing has steadily increased in value year over year from simply an investment standpoint coupled with the fact that more and more businesses are accepting bitcoin as a form of payment, we’re seeing mass-market adoption and validation of bitcoin as a viable currency in its own right. This is more-or-less what Bitcoin values have looked like over the years. As a result, your Bitcoin futures contract to short bitcoin is going to cost you money since you know you have to cover the difference at cash settlement of the price plus the margins. Business Insider broke down the risk of shorting bitcoin perfectly. The transaction fees alone should scare away most would-be bitcoin investors.
Shorting Bitcoin and going against the market is very likely going to be a money-losing proposition. If you want to make money on Bitcoin futures you should consider a futures contract where Bitcoin is at a higher place using history as your guide. Or just buy bitcoin outright. Do your research, do the math then make a well-informed decision based on conclusions.