Betting Against Crypto?

I’m not a big fan of decentralized currencies. Seems like the potential problems just outweigh the advantages, at least for the moment.

There was an article in a local paper implying there was now a way one could “bet against crypto”, but it has not been approved in Canada. Although I would be skeptical of this as well, I was wondering if any more financially sophisticated Dopers knew anything about how this works and could explain it to me. Many thanks.

It was always possible. You just have to find someone willing to loan you some bitcoin. You sell the bitcoin today for $18k each. At some later date, you purchase the bitcoin again so that you can pay off the loan. If the price of bitcoin has gone down, you pocket the difference. Of course, if it goes up, you’re SOL.

I suppose that some exchanges may now be offering this kind of service officially (called short selling in the stock market), but I don’t know the details.

There are futures on the CME, much simpler than a physical short.

If you Google “shorting crypto,” there’s several guides available. Apparently CFDs are one easy way to do it, but I don’t know anything about them.

Googling “inverse crypto ETFs” also shows me some ETFs (electronically traded funds) whose returns aim to mirror the inverse of a cryptocurrency’s performance for the day. It’s a bit different than straight-up shorting, and the returns will be different, but the inverse ETF should follow interday fluctuations pretty well.

No, avoid inverse ETFs like the plague. Opaque, with massive transactions costs from required daily rebalancing. I’d also avoid options unless you already understand options thoroughly and have experience trading them in more liquid markets.

If you’re brave enough to go short, keep it simple, minimize costs & bid-ask spreads. A short futures or short CFD position is the best way to go. The economics are transparent and straightforward - if it goes up $1 you lose $1, if it goes down $1 you profit $1 (times the contract size).

Don’t forget to think about how the instrument you choose is taxed on profits and losses. Getting taxed on the profits is fine so long as it’s symmetrical - i.e so long as you can “use” the tax loss if you lose money. If you can’t use the potential loss, it becomes horribly asymmetrical.

And if that doesn’t work, consider tulip bulbs.

At least with tulip bulbs you can get flowers.

When the world’s problems reach a critical stage and civilization really starts to come apart at the seams, let’s see what computer based currency will be worth then; NOTHING. We’ll be back to precious metals/jewels and bartering.

Hah. I’ll bet you three bags of flour that you are mistaken!

I’m curious about this as well. My gut has always told me Bitcoin and the rest were a bubble. When I saw an ad for crypto during the super bowl, I knew the bubble was close to bursting.

You can’t bet against Krypto! He’s Kryptonian! He has Super Speed and Super Strength. He’d put any greyhound on the track in the dust, and he’s eviscerate that fake rabbit!

What? Crypto with a “C”?

[Emily Litella]
Never mind!
[/Emily Litella]

I don’t think any kind of trustless decentralized currency will ever succeed. It will always be easier to use a currency managed by a central authority, whether that’s Dollars issued by the US treasury, or Logs issued by Amazon Inc. The risks associated with cryptocurrencies far outweigh any benefits it might have.