Interactive Brokers Allows Bitcoin Bears to‎ Short CFE Futures

The option to short Bitcoin has been mostly ‎available in the past few months ‎through CFD products.

US-listed brokerage Interactive Brokers Group, Inc. (NASDAQ GS: IBKR) today ‎enhanced its cryptocurrency offering by enabling the short trading of Cboe Futures Exchange (CFE) Bitcoin ‎futures‎‏.‏ Potential Bitcoin bears, however, need to be aware of the dangers ‎involved with the extremely risky financial product‏.‏

In addition, the cost to short Bitcoin is not cheap. In order to protect the company, ‎IB will accept Bitcoin’s short positions with a margin requirement of $40,000 ‎per contract, five times the value required for long positions of CFE Bitcoin ‎futures. ‎Since the contracts debuted on Sunday at Cboe Global Markets, Interactive ‎Brokers has required Bitcoin bulls to deposit a margin of ‎$9,000.‎

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While the company now enables its clients to easily access the price ‎movement of the world’s most popular cryptocurrency, it said that the new ‎offering doesn’t limit the potential losses associated with directing ‎investment funds to bet against Bitcoin futures contracts. ‎

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Interactive Brokers founder, Chairman and CEO Thomas Peterffy pointed ‎out that betting against the cryptocurrency is very risky given Bitcoin’s ‎volatility‏.‏ However, he noted: “The introduction of short sales was ‎necessitated by the large premium of the January futures contract over the price at which ‎Bitcoin trades on the physical venues.” ‎

Before IB’s action, the option to short Bitcoin has been mostly ‎available in the past few months through CFD products that are ‎offered by many forex brokers. This is not to mention that this hasn’t exactly been ‎a good choice so far, given the coin’s 17-fold surge in price. But for ‎those daring enough to try again, they now have a more regulated venue to ‎bet against the rise.‎

Short selling, in general, means selling an asset or derivative that you don’t own when ‎you expect its price to fall in the future. When it does, you buy back the ‎asset at the lower price and make a profit. It is the opposite of ‎buying the instrument (going long), where you profit when the price goes up ‎and lose when it goes down‏.‏

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