How to Make Money Betting Against Bitcoin?

How to Make Money Betting Against Bitcoin?

Many people believe crypto is the future of money. They invest millions of dollars into cryptocurrency. Owning cryptocurrency means you are participating in this revolution. But, not everyone loves crypto. Some say Bitcoin is similar to a Ponzi scheme and it is doomed to fail. We welcome both bitcoin believers and non-believers here. But today, this article is for non-believers. If you are a non-believer, there are a few ways you can bet against bitcoin. This is how you do it:

1) Shorting Bitcoin Futures

bitmex - bet against bitcoinThe easiest and the most straight forward way to bet against bitcoin is though bitcoin futures. Speculators can place a bet on what they believe the future price of bitcoin is going to be.

It enables investors to speculate on the price of bitcoin without having to own bitcoin. Bitcoin futures are essentially an agreement to buy/sell bitcoin at a specific date at a specific price, regardless of what the actual price is at the contract execution date.

If you want to bet against bitcoin, this is your opportunity. Bitcoin is largely unregulated. But, bitcoin futures can be traded on a regular exchange. So, if you are betting against bitcoin, you don’t have to be concerned about bitcoin’s unregulated nature.

To bet against bitcoin, all you have to do is go short on a Bitcoin futures contract. The best place to short a bitcoin futures contract is:

  • Bitmex – You can short Bitcoin and a few other popular cryptocurrencies.

2) Shorting Bitcoin

etoroAnother way to bet against bitcoin is by shorting it outright. You do not have to own bitcoin to short it. You will be borrowing bitcoin from someone else and shorting it. Yes, you will pay interest when you borrow from someone. But, you can easily pay off this interest if you earn from the short.

You borrow 1 Bitcoin from someone else and sell it at $10,000.

4 months later, Bitcoin drops to $4000.

Now you buy back 1 bitcoin for $4000 and pocket remaining $6000 ($10,000 – $4000).

This example didn’t account for interest. You will be actually earning a little less than $4000 with interest. Interest is determined based on how many people want to short bitcoin and how many people are willing to lend bitcoin.

If you continue shorting and pocket in bitcoin, theoretically, you will be earning less and less. You will have more bitcoins but it won’t value as much. Imagine, you short Bitcoin from $4000 and bitcoin goes to $0; you don’t make any money.

Shorting bitcoin is risky. It is risky because there is no price ceiling for Bitcoin as opposed to bitcoin going to zero. Which means there is no limit to your losses.

You borrow and sell bitcoin at $10,000.

4 months later, Bitcoin rises to $16,000.

Now you buy back and lose $6000.

If you are confident and determined to short bitcoin, you can do it using these exchanges:

If you want to learn how to earn interest on cryptocurrency by lending it, check out this article.

3) Buying other cryptocurrencies with Bitcoin

Buying other cryptocurrencies is an indirect way to bet against bitcoin. This will work for you if you believe in crypto but don’t believe in Bitcoin. Almost all cryptocurrencies trade against bitcoin. So, all you have to do it sell your bitcoin for other cryptocurrencies. For example, if you buy Ethereum with bitcoins, you are essentially betting Ethereum against Bitcoin.

Scenario 1:

You buy Ethereum with Bitcoin.

Bitcoin price falls, but the value of Ethereum stays the same.

You make a profit

Scenario 2:

You buy Ethereum with Bitcoin.

Bitcoin price rises.

Ethereum also rises.

You make even more profit.

Scenario 3:

You buy Ethereum with Bitcoin.

Bitcoin price drops.

Ethereum price drops.

You lose more.

Majority of cryptocurrencies follow the trend of Bitcoin. When bitcoin hit its historic highs in 2017, almost all cryptocurrencies gained in value. If you had bought any cryptocurrency during this time, you’d have gained a lot of money. But when Bitcoin crashed, not 1 cryptocurrency survived.

Buying cryptocurrencies to bet against bitcoin can be risky. Nonetheless, it can be done. These are the best exchanges to buy cryptocurrencies with Bitcoin:

4) Buying Tether (USDT/EURT)

tetherTether represents real currencies in the cryptocurrency market. It is backed by money in a 1:1 ratio. Backed with real money, investors put up when buying it. Tether has 2 tokens. USDT and EURT.

  • 1 USDT = 1 USD
  • 1 EURT = 1 EUR

(Tether) can be considered a stable coin. If you think bitcoin value is going to drop and you want to bet against it, buy Tether. You won’t lose money if bitcoin price drops. In fact, you can convert Tether back to bitcoin and other cryptocurrencies.

You buy 10,000 Tether (Approximately worth $10,000 USD).

Bitcoin price drops.

You still have $10,000 USD.

These are the top exchanges where you can buy/sell Tether:

5) Shorting Bitcoin Related Stocks

This is an indirect way to bet against bitcoin. All you have to do is short stocks that are crypto-related. Some of these stocks include:

  • Square Inc (NYSE: SQ ) – A service that lets users purchase bitcoin.
  • NVIDIA Corporation (NASDAQ: NVDA) – Bitcoin mining chips.
  • Advanced Micro Devices, Inc (NASDAQ: AMD) – Bitcoin mining chips.
  • Overstock.com, Inc (NASDAQ: OSTK) – Supports Bitcoin as a payment method.
  • Riot Blockchain, Inc (NASDAQ: RIOT) – Builds blockchain technologies.

6) Bitcoin binary options

In a way, this is similar to gambling. Bitcoin binary options is a form of trading where you predict if the bitcoin price is going to rise or fall. Each contract has a set time to check if your choice was correct or incorrect. When the contract executes, if you were correct, you earn. If you were wrong, you lose your investment.

Trading bitcoin binary options are extremely risky. This type of trading is not for everyone. If you do not understand the risks of binary options, stay away. However, if you still want to try it, these are your options:

7) Betting with someone

how to bet against bitcoinThe last way to bet against bitcoin is to directly place a one-to-one bet against Bitcoin’s biggest supporters. You can easily track them down using various bitcoin forums. With the development of “smart contracts” in the Ethereum network, you can literally place bets with anyone. You do not have to trust the other person to honor the bet; the smart contract will do it for you.

Kryptium is a platform that allows you to bet against others. This is a betting platform based on the Ethereum network. They allow different types of bets like pool bets, head to head bets, and multiplayer bets.

Final Words

Bitcoin is still new and there is no way to tell if bitcoin is going to fail or not. All the strategies mentioned above is risky. But, if you are confident that bitcoin is doomed to fail, these are the best ways to bet against it.

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