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Asked a question 5 months ago

What is the best way to short Bitcoin? Are there options? In short, what would be a good trade to benefit from a crash in Bitcoin?

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There are two traditional, exchanged traded futures contracts. 

-The ICE Bakkt (BAKKT)contract is for 1 bitcoin and is physically settled (meaning the holder at expiration is entitled to receive 1 “cash” bitcoin, retail traders are usually not allowed to hold contracts to expiration and take delivery though).

-The CME BTC (BRR) contract is for 5 bitcoin and is cash settled. 

As with other futures contracts, selling short is just as easy as going long and instead of putting up the notional trade value you put up a margin instead. The margins for both contracts are higher than most other futures and some brokers require additional margin on top for a short sided trade. Last I looked the overnight margin for the BAKKT contract was about 1/3 the price. As long as you have enough free capital in your acct to cover the margin, you can hold the position. This is what gives futures leverage. 

I would say that the best way to short BTC is cautiously or not at all. But here's a whole "how to and where to do it at" article if you want to dive in.

https://beincrypto.com/learn/shorting-bitcoin-how-it-works/85

 

LedgerX has calls/puts and futures also...

You can buy puts on MSTR, as it trades now in HUGE premium. It was trading at a valuation of 1.5B before they started to buy Bitcoin. Now with about 2.2B profits from Bitcoin it trades at 12.2B !!! This is crazy. But also the shorts/float is 26% so maybe the wallstreetbets are here. Don't know if the shorts are against the convertible bonds. 

And there is the risk it will join the S&P500 index.

And ATM puts for 40 days cost about 20%. 

But if Bitcoin will go down, I believe this is the short to be in.

My suggestion is to donate the money for some good cause instead of shorting Bitcoin.

John Doe
Legendary Punk-Rock Musician

There are many tools. Options deribit, ftx, various perpetual futures contracts, binance, kraken, bitfinex. RIP shorting bitcoin 😘

I've placed a few call options using derebit. They also allow 'perpetuals', a form of futures trading. For the last week or so I've been thinking of placing some put options on btc. I'd love to hear any experts share how they would hypothetically place this trade.

I'd recommend buying Puts on Deribit. You can short using Futures, but you can get liquidated instantly and lose all of your account collateral if the market spikes up against you. Buying Puts, on the other hand, does not have liquidation risk. You only risk losing the premium of the contract.

You could consider shorting or buying puts on ETFs/equities that move with BTC price changes. Some names to research: GBTC, MARA, RIOT

I think the CBOE has contracts now

Puts on futures. Although they are not as liquid as other future options they are not too bad. Depending on your level of comfort and experience with options you could also build spreads (put spreads, put flys/condors, sell call spreads.... 

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