The higher the prices fly, the more likely their risk will be – an equation that does not exclude the bitcoin flight. But even if the Bitcoin (BTC) crash emerge, there are opportunities for investors to benefit from it.
The Bitcoin shorten – that is not necessarily interesting only for Bitcoin skeptics. Even stocks that remained long-term stock market favorites have in the past from time to time laid significant setbacks on the floor. After each rocket launch, the courses run hot sometime. No reason to sit idly by the crash or even realize losses. Even from price setbacks, profits can be generated. Here a list of ways to shorten bitcoin as well.
Bet with CFDs against the Bitcoin
So-called Contract for Difference, CFDs for short, are part of the world of derivatives. This is therefore a paper that reflects the Bitcoin price, but the trade is based on no “real” Bitcoins. Anyone trading a CFD will basically make a bet with their respective broker. In this way, investors can speculate that the Bitcoin will fall – or rise – in the future.
As with all derivatives, there is a risk for investors even with CFDs not to be underestimated, because this type of investment is highly speculative. If you lose your bet with the broker – for example, the Bitcoin does not fall – this could be accompanied by the loss of your invested capital. Therefore, exercise caution before concluding the contract. As a rule, brokers and investors can freely agree on the values underlying the CFD. In addition, there is the so-called issuer risk with CFDs. In case of a bankruptcy of your broker, investors can suffer a total loss.
Bitcoin margin trading
Margin trading is a futures contract already offered by some Bitcoin exchanges, such as Bitfinex. With this type of investment, investors must pay part of the traded value in advance as collateral. The more volatile, that is riskier, an underlying asset, the higher this requirement. Accordingly, the margin requirement is rather high for the fluctuating Bitcoin price.
Trade with Bitcoin Futures
The launch of a Bitcoin futures on the Chicago derivatives exchange CME, at the Bitcoin price initially provided for additional thrust, as this is a big step to further acceptance of Bitcoin on the market. Derivatives include futures in the highest regulation range. With a Bitcoin Future, you can bet on a specific Bitcoin value at a specific time in the future.
Exchanged Traded Notes
Similar to Exchange-Traded Commodities, ETCs for short, ETNs are also derivatives that reflect the market value of a specific underlying asset, such as Bitcoin. Unlike ETCs, however, ETNs are not collateralized with the original underlying, meaning you are not trading in “real” bitcoins. Since mid-November, Vontobel has already launched a first Bitcoin ETN, which can be traded on the SIX Swiss Exchange. In doing so, investors can choose between long and short options that allow investors to either participate in a rising or falling Bitcoin price.
Borrow Bitcoin and resell it
It is already possible on some Bitcoin exchanges like Bitfinex. Here, investors can borrow assets temporarily and arrange repayment at a later date. Investors are speculating that the assets, in this case bitcoins, are cheaper at the agreed repayment date – the classic short-selling.
Stay away from the cryptocurrency market: Trade Bitcoin stocks
If you want to participate in the Bitcoin price, but want to avoid the still relatively unknown area of the crypto currency market, you can do so via the shares linked to Bitcoin. Chip makers like NVIDIA are closely tied to the Bitcoin and behave similarly. The advantage for investors is that they can move along familiar paths and not have to move on the Bitcoin exchanges if they want to shorten the “Bitcoin shares”. The security aspect is also not to be ignored here: Even if the price of these shares is influenced by a falling Bitcoin, it is not certain that the share price will move extremely, because there are also other factors involved. In this way possible mis-speculation and the associated losses could be mitigated.
The bottom line is a profit on a possible Bitcoin crash for investors while quite possible, but not without risk. Anyone who speculates on falling prices should therefore sound the risk of the targeted investment well and have the best possible market knowledge.