The cryptocurrency Bitcoin created a comparatively unheralded entry in the financial world as it was introduced in 2009. But its profile has improved steadily over the years as an increasing number of individuals are becoming interested in this alternate form of money.
Together with the greater interest in Bitcoin has turned into a rapidly increasing worth. After spending much of the first half of 2017 hovering around $1,000, it struck $5,000 in October and breached $7,000 in early November. Now, as of December 2017, it’s hit a fresh record high, with one Bitcoin valued at $17,450.01 (as of December 14, 2017). (By the way, you ought to be aware you don’t need How to buy and sell bitcoin online in this cryptocurrency. You can purchase”fractions” or”percentages” of a Bitcoin.)
Boosters say Bitcoin might reach $25,000 over the upcoming several decades. A growing number of monetary institutions are accepting Bitcoin. And it’s seen as a safe haven in a global economy that’s volatile, as Bitcoin not controlled by any government.
But despite the hype, the financial world is chomping at the bit to wager against Bitcoin. And they’ll soon have the opportunity. Bitcoin futures contracts are intended at CME Group Inc. (Chicago Mercantile Exchange), Cboe Global Markets Inc., and Nasdaq Inc.. That makes it much easier to bet against–or”short”–the cryptocurrency. The initial two strategy to introduce the contracts in mid-December, and Nasdaq will get its launch in early 2018.
When those futures contracts are available, hedge funds and other large investors are prepared to pounce. Why? Many financial watchers say Bitcoin is the best shorting opportunity ever. Part of the rationale is that after reaching 11,000 in value, the cryptocurrency dropped nearly 20% in value within 90 minutes, to just over $9,000… Then attained over $11,000 again a couple of days. There’s opportunity in that volatility.
Are The Early “Glory Days” of Bitcoin Over?
Bitcoin has captured the note of the mainstream financial press and the planet’s main investors and important players in the investment world, and of course regular traders that have come to understand that trading in Bitcoin can be quite lucrative.
1 way to get in on the action is to buy Bitcoin and then hold on to it, waiting for it to increase in value. If it reaches a price you feel comfortable with, you can then sell it and then pocket the profit.
This was a more viable option several years back, in the early days. In fact, many Bitcoin millionaires were created in the first days. Require Erik Finman, who began investing in Bitcoin as it was only $12. You do the math. Or take Barry Silbert, that purchased 48,000 Bitcoins for $350 each in 2014 when the U.S. Marshals Service auctioned off the stash of Ross Ulbricht, the creator of the Dark Web site Silk Road.
To give you some perspective, if you had invested $1 at Bitcoin in the very start, it would be worth $1.4 million now. If you really feel as if you missed the ship with Bitcoin you always have the option to invest in these additional cryptocurrency alternatives to Bitcoin.
Is Bitcoin The Next “Big Short”?
That brings us to what many think is going to be another way to cash in big on the Bitcoin phenomenon: You can”short” the cryptocurrency. What goes up must come down, and you can actually profit when any investment, such as Bitcoin, drops in value.
If you are not familiar, shorting an investment is a comparatively straightforward process–as much as the true trading. It is figuring out how your investment play–and actually earning a profit as the value of this investment moves up or down–that’s the tricky part.
Obviously, as with any investment, you can’t simply jump into the action uninformed and uneducated. But the excellent news is that you don’t need to become a pro. Anybody can find out how to short-sell Bitcoin to possibly gain.
With the purchase price of Bitcoin continuing to be relatively volatile and lots of analysts claiming that its current meteoric rise is unsustainable and a crash is imminent, the urgency to start trading and learning how to short-sell Bitcoin has never been more pressing . Another factor to consider is that world governments are closely scrutinizing Bitcoin exchanges and investments at the cryptocurrency. Due to its anonymous nature, police are concerned about the tax avoidance possibilities.
Options for Short-Selling
That said, below are a few of the ways you can earn a profit by betting against Bitcoin.
Direct Short Selling of Bitcoin
This is the easiest form of short selling Bitcoin: You sell off your present Bitcoin at a price you are comfortable with. Your expectation is that the value drops farther; and then, in the event that you so choose, you can buy Bitcoin again at a lower cost.
Margin Trading of Bitcoin
Many men and women start short selling Bitcoin using a margin trading platform devoted to crypotcurrencies. With this type of trading that you borrow money from a broker, make the trade, trusting your wager pays off.
There are several Bitcoin exchanges that let margin trading at this point, so you have plenty of alternatives.
Futures Trading of Bitcoin
It is also possible to find ways to market Bitcoin from the futures market. Here’s how it works: a future is basically a contract. You, as the buyer, agree to purchase Bitcoin at a future date at a specific fixed price. Within this type of trading, you are forecasting — hoping — that the purchase price of Bitcoin will appear. That way, when your contract expires you can purchase Bitcoin below the market price.
Binary Options Trading of Bitcoin
Another way you can figure out how to market Bitcoin is with alternatives trading, which involves”put” and”call” options.
Having a put option contract, you have the right to sell a predetermined quantity of Bitcoin, which you set, at a certain price at a specific moment. This is called the strike price. The put option gains worth as Bitcoin loses value compared to this attack price. Significantly, you aren’t required to sell the option if you don’t want to.
A call option contract provides you the right to buy shares in the same way. With this contract you’ve got the option to obtain a specific quantity of Bitcoin in a specific price until a particular date — that is the expiration date.
Get Started Short-Selling Bitcoin
We’re still in the first days of shorting Bitcoin. For many years, in-the-know investors have been coming up with creative strategies to profit by shorting Bitcoin.
However, with futures connections coming from big name associations CME Group Inc., Cboe Global Markets Inc., and Nasdaq Inc., it’s set to get even easier to short the cryptocurrency. This means that you can make money by betting on its decline, which most bearish market watchers say is inevitable.
Together with the volatility you don’t have to wait for a full-on bubble burst to profit. You are able to benefit from even relatively tiny declines in value, as well as the more extreme changes in Bitcoin’s worth.
As with any investment, learning how to short-sell Bitcoin is not a walk in the park. It requires research and a willingness to take risk. Most financial advisors could equate it with gaming… but if you play your cards right, you may benefit financially.