Re: switching to fiat money vs shorting Btc as a consistent hedging strategy
Your scenario is an extreme one though, from $60k to $30k is not just a normal drop it is a catastrophic market crash that is not going to happen that easily and is definitely not a regular thing. Usually we see smaller drops of 10% which is actually the most regular thing in this market and bigger "crashes" are around 30% most of the times.
Your exposure and the risks you are talking also decreases by a lot when you consider the smaller size of the drops. But generally speaking shorting is always riskier and shorting bitcoin specially when it is in a bull market has a bigger additional risk.
Your exposure and the risks you are talking also decreases by a lot when you consider the smaller size of the drops. But generally speaking shorting is always riskier and shorting bitcoin specially when it is in a bull market has a bigger additional risk.
that's right. Consider I came into this market at the beginning of 2018, as many others did, just after the bubble.
Especially during that first year, until Dec 2018, shorting could be very profitable instead as you will remember.
Now we went through a year-long bull market which proved so strong and shorting was certainly not reccomended, BUT..
another bearish phase will come, another consistent phase of price correction will come: and shorting during those times will not look as crazy as it may have looked during those last weeks.
As for the extent of the price reduction, I believe that $30000 can surely be in range, especially if the drop is fueled by some sort of bad reputational news, where everybody seems to just want to run away.
It will not happen next week of course, but when it drops, even if he drops from 100k, 30k will not be out of reach in my opinion.
As for the short trade itself, I have discovered this asset on binance which I kind of like because it look pretty balanced:
being aware as I am of how hard it is to short an asset, especially a raging one like btc, I find this tool quite interesting: because it's not futures so you don't have to pay any sort of funding; it doesn't belong in the derivatives section of binance either, so you don't have to face the risk of margin calls or some tricky surprises with margin/exposition ratio: it's just a tradable asset with its own chart like any other tradable binance asset.
The (inverse) correlation with btc is pretty balanced all in all and I think it's a nice tool for a price reduction phase in general.
We'll see what happens
