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After Bitcoin broke through the $64,000 mark and hit a record high, data from Huobi.com showed that on April 16, the price of Bitcoin plunged by more than $2,500 to below $61,000. According to Bitcoin Home, the amount of long orders liquidated on the entire network that day was as high as $1.46 billion, the highest level since March 25.
Amid the ups and downs, the first inverse Bitcoin ETF was quietly launched on April 15.
According to a statement by Steve Hawkins, CEO of Horizons ETF, the inverse Bitcoin ETF (code: BITI) launched by Horizons ETF allows investors to establish short positions in Bitcoin futures; the sister product BetaPro Bitcoin ETF (code: HBIT) listed at the same time will charge a fee of 1.00% and track Bitcoin futures.
"Buying HBIT and BITI is as easy as buying stocks and other ETFs through a broker, and it does not require investors to open a separate cryptocurrency account. In addition, BITI will provide investors with a way to short Bitcoin without using a margin account or shorting futures," said Stephen Hawkins.
"Currently, financial derivatives in traditional fields, such as futures contracts and options, have already penetrated into the cryptocurrency circle. If you want to short Bitcoin, you can trade through such derivatives. However, compliant exchanges, such as Coinbase, which has just been listed in the United States, do not have access to such contract trading. This inverse Bitcoin ETF listed in Canada this time provides another channel for short sellers." Li Bai, co-founder of Bicasso and partner of Bmeet, told Times Finance on April 16.
Should you short Bitcoin?
"More than 60,000 US dollars for one Bitcoin is really too exaggerated. This is the investment target with the highest single unit value I have ever seen. It cannot be seen or touched. What contribution has it made to human society? In my opinion, it can only be said that it has opened an era in which currency needs to be digitized." said a coin friend.
In his opinion, "This market is a good market, but when this market is unprecedentedly optimistic, it will burst."
The book "Reminiscences of a Stock Operator" records such a story: when 90 people buy call options, and the remaining 10 people buy put options, the stock will fall. The reason is that after these 90 people buy, they have no money and can't push the stock up, so the stock will fall. "This is the current situation in the cryptocurrency circle."
The bears' remarks naturally aroused rebuttals from many bulls. "Shorting Bitcoin is a rookie mistake, and shorting with leverage is even more stupid," said an investor who is long on Bitcoin.
In his opinion, leveraged short sellers made two mistakes: first, the price of Bitcoin is essentially driven by spot prices. No matter how rich the futures short sellers are, they cannot resist the reality that Wall Street is buying less and less Bitcoin. Second, leveraged short selling is like gambling, which requires unlimited cash to replenish bullets, which is like walking on the edge of a knife. 99.99% of humans do not have the skills and emotions to short sell.
"For ordinary investors, the risks of contracts and leverage are very high, so stay away from them if possible. You may make money 99 times out of 100 transactions, but lose everything if you lose once. Therefore, buying spot is the best option for ordinary investors," Noah Wang, co-founder of TOP Network, told Times Finance.
Noah Wang suggested, "If you really can't control yourself from playing with contracts and leveraging, then limit the funds you use to play with contracts and leverage to a certain amount. No matter whether you make a profit or a loss, you can't increase your stakes, otherwise you will eventually lose a lot of money."
"Any transaction is a payment for one's own cognition. Because of the information asymmetry between buyers and sellers, there are differences in value judgment, which leads to longs and shorts. For the crypto market, which has been a relatively alien species since its birth, there is no reference, and it is impossible to conduct value analysis through fundamentals, etc. Therefore, most of the traditional financial field's value investors are bearish." Li Bai, co-founder of Bicasso and partner of Bmeet, told Times Finance.
In fact, as early as 2017, many institutions and independent researchers called Bitcoin a "Ponzi scheme" and a "tulip scam."
One of the most famous bears is Microsoft co-founder Bill Gates. In March 2018, Bill Gates said: "If I can, I will short Bitcoin. I don't hold any Bitcoin." He explained that as an asset, it should not be expected to rise without producing anything. This is a pure "fool theory" investment.
Recently, Bill Gates talked about his views on Bitcoin and other cryptocurrencies in a media interview, saying that he has a neutral attitude towards Bitcoin. "I don't own Bitcoin, nor do I bear Bitcoin. ... But I think that converting funds into a more digital form to reduce transaction costs will be what the Gates Foundation plans to do in developing countries."
"At present, after Bitcoin has repeatedly set new highs, the entire crypto market has also seen a rebound in mainstream currencies, which is one of the performance characteristics of the middle and late stages of a bull market. With the rapid surge in market value, future selling pressure from profit-taking will become a resistance to continued upward momentum," Li Bai told Times Finance.
Risk aversion sentiment is polarized. "In the U.S. market, when it comes to choosing Bitcoin as a safe-haven asset, users' choices are still on a very extreme continuum." According to Gu Yanxi's observation, the general practice of financial institutions now is to hold 0.5% to 1% of their assets in Bitcoin to hedge the market risk of the entire investment portfolio.
At the same time, there are two extreme situations in the safe-haven market. One is the phenomenon of MicroStrategy CEO Michael Saylor borrowing money to hold a large amount of Bitcoin; the other is that a large number of institutional and individual investors are not optimistic about Bitcoin, and choose gold or some types of bonds as safe-haven assets.
Gu Yanxi believes that the safe-haven value of Bitcoin is specifically manifested in two aspects: First, as an electronic currency, Bitcoin is designed with a fixed total amount, which avoids the characteristics of legal currency issuance and can form differentiated competition with legal currency. Second, the correlation between Bitcoin and other mainstream assets is getting smaller and smaller, which means that its value as a safe-haven asset is getting higher and higher.
According to a recent report by Coindesk, the correlation between Bitcoin and gold and the S&P 500 is now increasingly close to zero, and it is also beginning to show a negative correlation with the U.S. dollar. "From the current development of the U.S. market, more and more funds will flow into Bitcoin," said Gu Yanxi.
Some research institutions also believe that although from a statistical point of view, Bitcoin does not seem to have much correlation with major macro assets, from the actual market perspective, Bitcoin has not become an asset for large amounts of funds to seek safe havens, but rather a reflection of global liquidity preferences and market sentiment.
Recently, Goldman Sachs announced the restart of its cryptocurrency trading department and began to provide customers with Bitcoin futures contracts and non-deliverable forward (NDF) trading services.
"Goldman Sachs tried to set up a cryptocurrency trading platform in 2018, but it ended abruptly due to the market crash. Now it has restarted Bitcoin trading services. The most fundamental reason is that the price of Bitcoin has started a new round of violent fluctuations, and the overall trend is stable and improving. This kind of fluctuation is a huge risk and unbearable for ordinary investors, but it is an opportunity for institutional investors, especially for investors who hope to gain high returns in a low-interest market environment. Holding Bitcoin long or short positions is a good investment option." Jiang Zhaosheng, director of blockchain research at Zero One Think Tank and researcher at Digital Asset Research Institute, analyzed to Times Finance.
For Bitcoin, a risk that cannot be ignored comes from the policies of various countries. Although nearly ten applications for Bitcoin ETFs have been submitted to the US SEC, none of them have been approved so far.
In fact, the United States is increasingly regulating cryptocurrencies. On April 16, U.S. Press Secretary Jen Psaki said that President Biden followed the views of Treasury Secretary Janet Yellen on regulating cryptocurrencies. It is reported that at the confirmation hearing in January this year, Yellen called on lawmakers to "reduce" the use of cryptocurrencies. She said: "I think we do need to look at ways to reduce the use of cryptocurrencies and ensure that money laundering is not carried out through these channels."
With the world's first inverse Bitcoin ETF listed on the Toronto Stock Exchange, Canada is once again ahead of the United States in Bitcoin trading. Two months ago, the first Bitcoin ETF in North America was listed in Toronto, with assets reaching US$1 billion, or about 1.25 billion Canadian dollars. (Times Finance) |
