With Cboe launching its futures markets and CME set to begin its bitcoin derivatives products next week, many people are speculating on individuals and organizations short selling the cryptocurrency. However, there already is a publicly traded bitcoin investment vehicle called the Bitcoin Trust (GBTC) that can be short sold as well. Although, those trying to short GBTC this year have been getting burned as GBTC short sales are down 217 percent.
Traders Who Tried to Short Sell GBTC This Year Are Nursing Significant Losses
Futures markets are coming to bitcoin as the most prominent exchanges in the world are set to offer bitcoin-based derivatives products to mainstream investors. However, many bitcoiners are scared that ‘Wall Street types’ and other entities will ‘short’ bitcoin’s price value to oblivion. Short selling is when an investor or a group of people are motivated by the belief that bitcoin’s market price will go down in the future. Short traders then place a bet against bitcoin’s price in hopes it will drop. There are many reasons why investorswould short sell bitcoin as the process can be lucrative if a person can predict large price dips. 2017 hasn’t been very favorable for those trying to short GBTC as the managing director at S3 Partners LLC, Ihor Dusaniwsky, explains many traders are getting burned.
For instance, a $1M short position created in September would net a loss of roughly $622,000 Dusaniwsky explains to the financial publication Market Watch.
“It has been brutal for bitcoin shorts. We estimate shorts are down about $46 million in year-to-date mark-to-market losses, or down 217%,” Dusaniwsky tells the financial news outlet…