This is dreadful advice that nobody should follow.
(1) Shorting has a completely different risk profile than going long. If you're short, you can lose an infinite amount of money. If you're long, the most you can lose is what you put in. Unless you're familiar with what it means to take a short position in traditional markets, for the love of God don't do it in crypto.
(2) The market can remain irrational longer than you can remain solvent, and Herbalife has been chugging along since 1980 - in spite of the widely publicized 5-year-long short Bill Ackman took. Even if the shorts are right, timing it is extremely hard, and chances are you'll lose your shirt before then.
(3) Most exchanges that permit short positions are criminal enterprises, all the major non-US ones are under investigation. Binance is under investigation by every major world financial authority including the Cayman Islands. They'll require you post collateral in crypto as well, which adds yet another layer of counter-party risk. Even if you're right, and you time it right, a collapse would likely wipe out Binance (or your collateral) - or it wouldn't and they just wouldn't pay you out, SFYL.
(4) All exchanges have a huge interest in seeing the game continue, and are more than likely colluding to keep the price up.
Most of us bears believe that Bitcoin exchanges are crooked Mob casinos - entirely in isolation of the fundamental Ponzi nature of the underlying asset. What you're suggesting amounts to telling someone who believes the casino is crooked to bet on red instead of black. The only way to win is not to play.
[edit] Yes, you can short CME futures (with massive 200% collateral requirements), yes I've done it, yes I've made money, not you shouldn't. Nobody should.
WOOOSH The point is that it's terrible advice. My point is people who espouse how smart they are about something should put up or shut up.
1.) there are a multitude of ways to you can do this on a decentralized exchange DYDX as well. Or a Mercantile exchange like BITMEX.
2.) Funny you should bring up Bill Akman he publicized his short position, and another investor took a counter bet to him. That investor so happened to do it out of (speculated) spite. So not really a good example but since we're here Herbalife was investigated and not found to be an MLM, although I'll grant you that the SEC came RIGHT up to the line in calling them an MLM scheme.
3.) I'll move past the criminal enterprise portion as that's for courts to decide. With respect to binance specifically there are multiple ways to go short I'll post the straight forward versions. Cash settled perpetual swaps, Coin settled perpetual swaps, Put option contracts, Margin shorting. The way I would recommend people short bitcoin is cash settled perpetual swaps, you will be paid out as there are insurance funds that are VERY LARGE you can see what they are, that will pay out winners should losers positions can't be sold to the market.
4.) So does every exchange with respect to the market they serve, the smart exchanges actually want to be price neutral as they view as a business, both FTX and Binance CEO go on the record about this.
So you don't want to short BTC but you still think it's a ponzi scheme ... report it as such to the SEC. Accept that's a loss cause because bitcoin is deemed as property, furthermore a commodity and thus regulated by the CFTC.
I'll finish about the crooked casino portion... you can do this in a decentralized fashion with DYDX or another de centralized exchange. EVEN IF you didn't want to take the time to do that. RIGHT NOW you can go to IBKR and take a short position on the greyscale trust which is essence a short position on BTC. FURTHERMORE if you think these exchanges are crooked and are doomed to fail. Take a short position on the exchange it self. Binance and FTX have their own coins (which are probably securities) that you can take short positions out on.
Final words, how long must a market remain irrational before your prospectus is wrong about the market being irrational? The paradox is if you answer infinity, you may be "right" but you're still wrong.
> WOOOSH The point is that it's terrible advice. My point is people who espouse how smart they are about something should put up or shut up.
I get your point, and I'm telling you that the thing they should do is nothing, not take a short position.
Your argument that "if you're so smart you should short it" is BS. If you're smart, you'd stay the heck away.
(1) Decentralized exchanges have all sorts of their own issues, from contract bugs to flashbots, to requiring crypto collateral that may also get nuked in the event of a systemic collapse due to Tether or Bitcoin.
(2) Herbalife is an MLM, but MLMs are not illegal. In fact it says so on their wikpedia page [1]
(3) Anything at any crypto exchange is subject to massive systemic risk.
> So you don't want to short BTC but you still think it's a ponzi scheme ... report it as such to the SEC. Accept that's a loss cause because bitcoin is deemed as property, furthermore a commodity and thus regulated by the CFTC.
The SEC is well aware of its structure, as is the CFTC. They'll act as they deem appropriate in due course, or they won't. But that's a non sequitur. It's actually the first item listed under common misconceptions.
>> That is not the legal definition of ponzi in country X. The legal definition is relevant to understanding the legal implications: can anyone in Crypto Space be prosecuted for running/promoting/aiding that scheme in country X? But if one wants to know whether bitcoin is a good investment, or just an old type of investment fraud with a new coat of paint, the legal definition is irrelevant. One must use a quacks-like-a-duck definition, that describes the mechanism through which fools and money are separated and the reasons why it is a fraud.
> FURTHERMORE if you think these exchanges are crooked and are doomed to fail. Take a short position on the exchange it self. Binance and FTX have their own coins (which are probably securities) that you can take short positions out on.
At the same casino, taking a short against the casino at the casino is the worst plan I've ever heard. If they go under they won't pay you out. The entire crypto ecosystem is one giant distributed casino. Why would you say crooked exchanges are doomed to fail - and on any particular time horizon?
> Final words, how long must a market remain irrational before your prospectus is wrong about the market being irrational? The paradox is if you answer infinity, you may be "right" but you're still wrong.
This is a total non sequitur.
Nothing you've said is representative of the way markets actually operate here in reality, and you've provided incorrect and dangerous advice.
(1) Shorting has a completely different risk profile than going long. If you're short, you can lose an infinite amount of money. If you're long, the most you can lose is what you put in. Unless you're familiar with what it means to take a short position in traditional markets, for the love of God don't do it in crypto.
(2) The market can remain irrational longer than you can remain solvent, and Herbalife has been chugging along since 1980 - in spite of the widely publicized 5-year-long short Bill Ackman took. Even if the shorts are right, timing it is extremely hard, and chances are you'll lose your shirt before then.
(3) Most exchanges that permit short positions are criminal enterprises, all the major non-US ones are under investigation. Binance is under investigation by every major world financial authority including the Cayman Islands. They'll require you post collateral in crypto as well, which adds yet another layer of counter-party risk. Even if you're right, and you time it right, a collapse would likely wipe out Binance (or your collateral) - or it wouldn't and they just wouldn't pay you out, SFYL.
(4) All exchanges have a huge interest in seeing the game continue, and are more than likely colluding to keep the price up.
Most of us bears believe that Bitcoin exchanges are crooked Mob casinos - entirely in isolation of the fundamental Ponzi nature of the underlying asset. What you're suggesting amounts to telling someone who believes the casino is crooked to bet on red instead of black. The only way to win is not to play.
[edit] Yes, you can short CME futures (with massive 200% collateral requirements), yes I've done it, yes I've made money, not you shouldn't. Nobody should.