Post
Topic
Board Speculation
Merits 2 from 2 users
Re: Wall Observer BTC/USD - Bitcoin price movement tracking & discussion
by
Spaceman_Spiff_Original
on 13/12/2018, 18:28:03 UTC
⭐ Merited by El duderino_ (1) ,bitserve (1)
There is an excellent article which I read which explains why odds are stacked against shorts in the long run.  Shorting is always a short term play.  I am going to try to find it.  

hope you can find it, like to read it Smiley

I am not sure what the article says, but I can name 2 reasons:

- mathematics: in a short position you can only maximally make 100% of the money you put in (if you don't use leverage).   If you short $100 worth of something, the best you can hope for is it goes to zero and you make $100.  For longs, profit is potentially infinite.  Ask somebody who put in $100 in bitcoin when it was worth $1/BTC how much money they made, it is slightly more than $100.

- inflation: In a world where fiat is the currency, and central banks have a mandate to produce 2% inflation, assets that break even on purchasing power go up in price 2% a year.  That means that shorters lose 2% a year as a baseline.  (shorting something denominated in bitcoin might be less unfavorable for this reason).


EDIT:
- a third reason: risk: a short position is always a margin position with risk of liquidation.  Longs can just keep their position for years without ever having to worry about being wiped out due to market volatility.