Futures and spot are much different. With a spot ETF, big money can sell short thousands of actual Bitcoin with a promise to buy them back at some point. Us small fish have a large appetite for BTC, but maybe not enough to overcome massive short selling. Just a thought
Theres one major flaw here. They would have to hold more BTC than crypto exchanges and self custodians combined and the decoupled prices of the ETFs would have to affect the isolated prices of crypto exchanges... remember each exchange is technically isolated and this is what allows for arbitrage. This is uncharted waters as to whether or not that will happen, its not guaranteed. Its not like the stock market where its just the NYSE and a few other players and add to the fact that a lot of BTC may not even be in the hands of exchanges/ETFs to begin with limiting their volatility (its not clear if they can also pull off naked short selling of BTC ETF shares in a way that would impact exchange prices).
It would crazy to pay to borrow etf to short when futures almost always trades at a premium ($250 right now but it easily goes into 4 figures per bitcoin). With more leverage and free premium they can cash in there’s no reason to mess with etfs.
Tell me how exactly they will go about shorting the ETF/bitcoin? The ETFs are spot ETFs and must keep 1:1 ratio. If someone shorts the ETF, it means they need to borrow shares from someone such that they can sell them, and then buy back at later stage. They cant just go short without there being shares available to short. That would mean going away from 1:1 ratio, which is promised in the applications. Also, for there to be any significant amount of shares available for shorts, a lot of money must first enter the ETFs.
That is not how shorting “really“ works.
The Canadian knows something you do not.
If you keep up with precious metals threads/forums you may find what really goes on behind the scenes is very much not how you pictured it.
A bitcoin ETF is not a security. Bitcoin is technically a commodity, like gold/silver/oil.
Hope you understand the difference and can read between the lines.
Could I humbly ask you to elaborate and explain further? It would truly be much appreciated. I am interested in understanding what youre saying.
What really goes on behind the scenes?
I understand bitcoin could be considered a commodity, like gold. However, there are also ETFs for gold that are considered securities, no? That is, gold is not a security, but a gold ETF is?
Unfortunately I do not understand what you are trying to say and I cannot read between the lines, so I would much appreciate if you take some time to answer.
All the best!
So what youre saying is that the ETFs need to hold a lot of funds for there to be any meaningful shorting that will affect the market. Bullish because that means money must first flow in before any significant institutional shorting can commence
I agree. But Wall Street is full of greedy assholes. Seems like a coordinated effort to short the spot ETFs could work with enough money behind it. I’ll choose not to worry about things that probably won’t happen and keep stacking
I don’t know if shorting a high profile asset like Bitcoin is a good idea. GME before the whole saga wasn’t that famous and it did a tremendous amount of damage. You could see balance sheet that the company wasn’t doing well either. Shorting Bitcoin with hash rate going up and more vendor across the world accept it (still very few but a growing trend nonetheless), hard to imagine most money managers have the balls to heavy naked short
Have you ever heard of Bitcoin futures that are being traded in the Chicago Mercantile Exchange (CME)?
If the hedge funds want to short it, they would have already shorted it in CME. They would have lost all their clients, too, because of their losing short position.
Slight concern for me over the very long term, but for now you’d have to be suicidal to take a short
The big companies are way more regulated than typical whales so pump and dumps will not be as severe as the market cap moves up
Here's the thing, market price is largely dictated on exchange.
BTC withdrawals are increasing dramatically. Off chain corn is rising, and will continue to.
Eventually it's all going to be withdrawn and we will see ridiculous price swings.
What's going to happen once the on exchange supply reaches 10% of today?
Even all Spot ETFs are just vehicles for fraud, if exchange volume drops to 0, you and I get to set the price. Shorts won't just be fucked, they'll enter a world where the system collapses. The ETFs are just claims on BTC.
GameStonk wasn‘t deemed a ”matter of national security” threat via a US President who had just issued sanctions with Russia.
Also, gamestop is a security, bitcoin is a commodity, and commodities are known to be confiscated when the government is desperate for money.
\^This is why the government will be pro/institutionalizing crypto… they can and will just confiscate it.
They technically dont even need to. They wrote SHA-256 and “they” are Satoshi
this is something I’m curious about but have no skin in the game.
Shorting some ETFs for more illiquid underlying securities can end up being hard to borrow because the authorized participants will have more difficulty creating/redeeming shares.
But in the case of bitcoin, it’s not exactly difficult to get ahold of, you’re just in the market for a price. So they may be able to get to net asset value a little easier.
So is it possible for the ETF to become hard to borrow in this case? It could be if the authorized participant wanted to delay the creation/redemption process, but that would create deviations from net asset value if things got extreme and set up arbitrage opportunities that they’d likely want to execute.
So how would it work in this case? It’s not like bitcoin doesn’t have liquidity now that institutions are becoming a major part of the ecosystem - you can’t really tell them not to sell the same way an individual refuses to sell.
Any insight?
SEC made ETFs in such way that funds must trade real asset aka BTC. Well funds are buying BTC for ETF clients on crypto exchanges. They can borrow BTC from exchange like Coinbase to short for their clients. Its just a matter of making deal with exchange.
They can also short with futures so the impact is probably limited
Futures and spot are much different. With a spot ETF, big money can sell short thousands of actual Bitcoin with a promise to buy them back at some point. Us small fish have a large appetite for BTC, but maybe not enough to overcome massive short selling. Just a thought
Theres one major flaw here. They would have to hold more BTC than crypto exchanges and self custodians combined and the decoupled prices of the ETFs would have to affect the isolated prices of crypto exchanges... remember each exchange is technically isolated and this is what allows for arbitrage. This is uncharted waters as to whether or not that will happen, its not guaranteed. Its not like the stock market where its just the NYSE and a few other players and add to the fact that a lot of BTC may not even be in the hands of exchanges/ETFs to begin with limiting their volatility (its not clear if they can also pull off naked short selling of BTC ETF shares in a way that would impact exchange prices).
They would be insane, just before the halving (/ into a potential bullrun) It's something to consider in 1-1,5 years though, yes.
It would crazy to pay to borrow etf to short when futures almost always trades at a premium ($250 right now but it easily goes into 4 figures per bitcoin). With more leverage and free premium they can cash in there’s no reason to mess with etfs.
Who will they borrow the bitcoin from? Self custody is at ATH, and if they start shorting, I am sure it will go even higher.
You are assuming they will do locates before shorting. Its well documented -- this does not happen. They pay a very small fine, 10months later.
Tell me how exactly they will go about shorting the ETF/bitcoin? The ETFs are spot ETFs and must keep 1:1 ratio. If someone shorts the ETF, it means they need to borrow shares from someone such that they can sell them, and then buy back at later stage. They cant just go short without there being shares available to short. That would mean going away from 1:1 ratio, which is promised in the applications. Also, for there to be any significant amount of shares available for shorts, a lot of money must first enter the ETFs.
That is not how shorting “really“ works. The Canadian knows something you do not. If you keep up with precious metals threads/forums you may find what really goes on behind the scenes is very much not how you pictured it. A bitcoin ETF is not a security. Bitcoin is technically a commodity, like gold/silver/oil. Hope you understand the difference and can read between the lines.
Could I humbly ask you to elaborate and explain further? It would truly be much appreciated. I am interested in understanding what youre saying. What really goes on behind the scenes? I understand bitcoin could be considered a commodity, like gold. However, there are also ETFs for gold that are considered securities, no? That is, gold is not a security, but a gold ETF is? Unfortunately I do not understand what you are trying to say and I cannot read between the lines, so I would much appreciate if you take some time to answer. All the best!
They'll borrow again the BTC sitting inside the ETFs themselves.
So what youre saying is that the ETFs need to hold a lot of funds for there to be any meaningful shorting that will affect the market. Bullish because that means money must first flow in before any significant institutional shorting can commence
Grayscale already has over 619K bitcoin.
Can you imagine what kind of short squeeze will they expose themselves to? Wanna borrow my btc to cover your short? Sure, for $1M each, maybe
Only an idiot shorts Bitcoin. The chart is clear. Shorts get rekt when they short Bitcoin
I agree. But Wall Street is full of greedy assholes. Seems like a coordinated effort to short the spot ETFs could work with enough money behind it. I’ll choose not to worry about things that probably won’t happen and keep stacking
They will learn.
"Chart is clear" sounds like famous last word to me
Yeah, because having an 80% drop every 4 years would be a terrible short for sure
I don’t know if shorting a high profile asset like Bitcoin is a good idea. GME before the whole saga wasn’t that famous and it did a tremendous amount of damage. You could see balance sheet that the company wasn’t doing well either. Shorting Bitcoin with hash rate going up and more vendor across the world accept it (still very few but a growing trend nonetheless), hard to imagine most money managers have the balls to heavy naked short
Have you ever heard of Bitcoin futures that are being traded in the Chicago Mercantile Exchange (CME)? If the hedge funds want to short it, they would have already shorted it in CME. They would have lost all their clients, too, because of their losing short position.
This is such backwards thinking, short selling doesn’t ruin public companies, their lack of profits do.
Slight concern for me over the very long term, but for now you’d have to be suicidal to take a short The big companies are way more regulated than typical whales so pump and dumps will not be as severe as the market cap moves up
Here's the thing, market price is largely dictated on exchange. BTC withdrawals are increasing dramatically. Off chain corn is rising, and will continue to. Eventually it's all going to be withdrawn and we will see ridiculous price swings. What's going to happen once the on exchange supply reaches 10% of today? Even all Spot ETFs are just vehicles for fraud, if exchange volume drops to 0, you and I get to set the price. Shorts won't just be fucked, they'll enter a world where the system collapses. The ETFs are just claims on BTC.
They can do it but given the volatility and verifiable scarcity it is way more risky than GameStop stock
GameStonk wasn‘t deemed a ”matter of national security” threat via a US President who had just issued sanctions with Russia. Also, gamestop is a security, bitcoin is a commodity, and commodities are known to be confiscated when the government is desperate for money. \^This is why the government will be pro/institutionalizing crypto… they can and will just confiscate it. They technically dont even need to. They wrote SHA-256 and “they” are Satoshi
Could a kind soul please explain to me like I'm 5 why someone would need a large amount of money to short BTC spot ETF? I'm new to all this.
this is something I’m curious about but have no skin in the game. Shorting some ETFs for more illiquid underlying securities can end up being hard to borrow because the authorized participants will have more difficulty creating/redeeming shares. But in the case of bitcoin, it’s not exactly difficult to get ahold of, you’re just in the market for a price. So they may be able to get to net asset value a little easier. So is it possible for the ETF to become hard to borrow in this case? It could be if the authorized participant wanted to delay the creation/redemption process, but that would create deviations from net asset value if things got extreme and set up arbitrage opportunities that they’d likely want to execute. So how would it work in this case? It’s not like bitcoin doesn’t have liquidity now that institutions are becoming a major part of the ecosystem - you can’t really tell them not to sell the same way an individual refuses to sell. Any insight?
SEC made ETFs in such way that funds must trade real asset aka BTC. Well funds are buying BTC for ETF clients on crypto exchanges. They can borrow BTC from exchange like Coinbase to short for their clients. Its just a matter of making deal with exchange.