| > Also, you can short crypto on CME. Is that rigged too? I think your first point is fair, but I think you're overselling things here. Yyou can only short Bitcoin, not all crypto, but the real issue is that the Bitcoin futures curve is in backwardation, which implies a certain financing cost to go short. The settlements for the various contracts can be found here[0]. Nearly all of the volume is concentrated in the front month contract (Jan 23 at the moment), so if you want to be able to trade any size at all, you'll have to do so by selling that contract. However, the issue is that the future price is consistently lower than the spot price. So if you bought a Bitcoin today and then sold a future for the front month (i.e. so you locked in the price you could sell the Bitcoin at in the future), you would be guaranteed to lose money. And you will effectively have to do exactly that every month: as your short contract approaches expiry, you'll need to roll it over for the next month's contract. As the front month gets closer to expiry, its price will trend to the Bitcoin spot price, meaning you'll have to buy it back at a higher price then you will get when you sell the next month contract. I don't have access to the historical settlement prices for the CME contracts at the moment, so I can't estimate the exact roll cost you'd pay over the course of a year. If we guess that it's about $100 each roll, then you'd pay $1200 over the course of the year per bitcoin (as well as having to commit 50% of the price of bitcoin in margin). The OP posted 185 USDC net as collateral and has a short position of 450 USDT, which he's paying about 13% on. In the CME case, the collateral requirements are higher (50% of the notional shorted) but the financing cost is lower (less than 10% of notional shorted). [0] https://www.cmegroup.com/markets/cryptocurrencies/bitcoin/bi... |
Otherwise someone would offer cheaper options and undercut all the existing market makers.