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Comment by qubex | Hacker News Reader

How could this surprise anybody? Even back in November, just by analysing the time-series, there was ample evidence of what was to come:

https://mynabla.com/2017/11/30/bubble-trouble-exploring-an-l...

https://mynabla.com/2017/11/09/a-monte-carlo-simulation-of-b...

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Of course, you didn't short it by any chance did you? Since it was so obvious.

Do you know how shorting works? The only way to limit margin requirements of a short would be to buy puts, which would open you up to theta decay, and I don’t think there is anywhere that would even trade BTC options since the IV would be crazy.

Who said anything about margin?

You did, because you need a margin account to open short positions.

That's not a good argument. Shorting into a bubble is super dangerous, because while you can be highly certain that the bubble will pop, you can't predict how high it will go before it pops. The optimal way to trade a bubble is to be long for as long as your risk tolerance allows and then you stay flat. You only short once the bubble has popped.

Exactly, in my experience bubbles always last longer than expected. One example strategy: buy, and then sell half every time it doubles. You've turned an exponential gain into a linear gain, but once you've done that first sale you've de-risked the pop date.

If you cannot provide precise timing, it is by definition not a bubble, it's just confirmation bias around a volatile asset.

Please stop using the word "bubble." It tells you absolutely nothing useful about the price of Bitcoin tomorrow.

Sorry, I don’t see your reasoning here.

I could’ve saw that the NASDAQ was in a bubble in January 2000 and shorted it.

My timing of the top would’ve obviously been off, and I could’ve gotten margin called and forcibly liquidated (with realized losses) by the time it was at peak in March 2000. That does not mean there was no dot-com bubble, just that you could lose hard shorting at the wrong time.

There are ways to avoid margin calls with options, but time would still be working against you with theta decay, so you could still lose money if your timing is off.

Legitimately asking: Can you even short Bitcoin? At least safely.

Shorts as a concept are designed around legally binding contracts. If you fail to pay out on a short you sell, they'll sue you and you'll be suspended in the markets. How would that work on something like Bitcoin?

Yes you can, without ever touching a bitcoin. CBOE offers cash settled bitcoin futures.

CBOE futures launched Dec 10 last year though, so they have only recently been an option.

I wonder how people trading those futures see the bitcoin market (my assumption is that many of them will be much more sophisticated than the typical "crypto" trader).

You can now with the futures XBT

Two options off the top of my head:

1/ Use the CBOE or CME futures for this. Just need to signup with a broker and sell a contract. 2/ Borrow BTC frome a holder. Agree to pay some interest. Then sell that BTC.

You can short Bitcoin via the futures markets launched in December by CME and CBOE. https://www.fool.com/investing/2017/12/10/cme-bitcoin-future...

You can open a short futures position in /XBT (1 btc contract) or /BTC (5 btc contract), but that is obviously not safe, and the margin requirements to even enter are insanely large. And they don’t offer options, so there really is no way to limit your risk.

I've shorted BTC a couple of times in an app (EU regulated) that allows CFD trading. Trading gets halted for a couple of seconds multiple times a minute when the market is very volatile though, so safely is a big word.

Knowing it was coming and knowing when are two different things. Better to buy when it's cheap(er) than to short and loose your shirt.

Probably he/she didn't, because as you probably well know the market can remain irrational longer than most (retail) investors can remain solvent.

No I didn't. I first got into this argument 25 days ago on Reddit, I was asked back then why I wasn't shorting it if I was so sure it was bound to collapse in value... my answer then, and now, is that I cannot really be bothered. Yes, there's money to be made, but quite frankly, I run my own business and concentrate on making my employees’ lives worth living, not on placing myself in opposition to other people on the zero-sum field of financial speculation. My equity is in the privately-held firm and to offset that potentially-high-volatility I put all my savings into boring stuff like sovereign bonds of double and tripe A ratings. I like my investments to be boring. I don't want to sound arrogant but I count myself firmly in the “I have enough, no need to be greedy” camp.

I think Warren Buffet put it best, when he said that (paraphrasing) he would never short Bitcoin, but he would happily buy a whole stack of put options.

With the rate at which Bitcoin was going up, shorting it would be practically begging your broker to shower you with margin calls. That is assuming you'd be able to get a broker willing to help you take on that risk in the first place.

re: Your second link.

How is this 'evidence on what was to come'?

Not evidence, but it sort of comforts me that the bitcoin exchange rate seems to be trending towards the predicted median price that comes out of the Monte Carlo runs. Of course that could just be noise. It's the first one that I found particularly compelling (perhaps because I did research on LPPL dynamics back in the mid 2000s, so it's a technique I put some faith in).

By your own analysis it's a distribution. Why does any single draw from this distribution, even if it is close to the median, give you any comfort when the odds of being near the median were already extremely low in such a high variance distribution?

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