[jb775]

What's the best way to take a bearish position on Bitcoin? I looked into it during the price surge a few years ago, but couldn't find anything that didn't involve setting up non-USA accounts. Any secure ways to do this for US citizens?

[hpkuarg]

CME offers Bitcoin futures[1], available for trading via Globex. It's a futures contract, so you won't hold any BTC position (long or short), and it's actually cash-settled, so you don't have to worry about delivering or actual BTC.

However, margin will be steep, considering the volatility; my broker in particular actually has a $200k overnight margin requirement for a short position.

I'm sure you've heard the saying that the market will remain irrational for longer than you can remain solvent. Please keep that in mind when shorting bubbles.

[1] https://www.cmegroup.com/trading/equity-index/us-index/bitco...

[jb775]

Awesome, I'll look into. Are you able to quickly buy/sell contracts whenever? I can live with market-timing risks, but not with risks outside of my personal decision control (e.g. i want to sell a futures contract but the platform says I can't for w/e reason, or they can't find a buyer, etc)

[hpkuarg]

Yes. These /BRR contracts trade on Globex like most other futures contracts, meaning around-the-clock (23/5) trading. Liquidity is fine for single contracts in the front month -- bid/ask spreads are one to three ticks, and you won't have any problems getting filled. If you're trading tens of contracts, you're going to move the order book somewhat, but I'm assuming your volume isn't at that level. Like any other tradable instrument, you run the risk of slippage in volatile situations, e.g. a stop loss hitting during a big liquidation event. Since you appear to be willing to hold a short position for a long time, this shouldn't be an issue for you.

Exchange (that is, Globex) availability hasn't ever really been an issue (and I can't remember the last outage they had; it'll be a big deal, considering there are literal trillions in notional value swapping hands every day). Your broker, which will be your gateway to actually trading the contracts, will be the bottleneck of availability.

I personally use Interactive Brokers, and their uptime is great. Even during times of extreme volatility this year across many markets, which caused the likes of Robinhood or even more established brokers like TD Ameritrade to experience downtime, IBKR has been fine. Obviously your mileage may vary and I suggest you do your due diligence on brokers.

[anon9001]

Another way to do it is by borrowing bitcoin with other collateral, selling it, then buying it back at a cheaper price. You can get a sense of rates here: https://defirate.com/loans/

So you might supply USDC on Aave and borrow WBTC. You can then trade that WBTC for USD (if you're bearish on BTC relative to USD), wait for the WBTC price to drop, buy it back and repay your loan.

Though if you're wealthy enough to trade the futures, it's taxed more favorably and easier to manage.