Former International Monetary Fund economist Mark Dow announced an unpopular opinion after Bitcoin reached a peak of about $ 20,000 last year – he will not be able to continue to grow and will inevitably fall – supporting his words with a short position that he closed only this week.
Today I say goodbye to bitcoin short. It's a pity!
On December 24, 2017, Dow released a publication in which he explained why he did not see any possibility for further growth of the Bitcoin price:
“First, Bitcoin is volatile. Its annual level of volatility exceeds 100%, that is, on the day it rises or falls by more than 6%.
Secondly, bitcoin exchanges are open around the clock, while bitcoin futures are traded during standard Globex hours.
Third, the exchanges have integrity risks (for example, Mt Gox), and Bitcoin futures have a 20% limit on price deviation. These two latter factors lead to an increase in the risk of price gaps for those who trade in futures. I assume that these risks are more important for long positions than for short ones . ”
In a conversation with Bloomberg on Tuesday, Dow reported that he had already made a profit from his short position twice over the past year, but now he decided to close it completely. However, he did not clarify whether this decision is based on the expectation of resumption of Bitcoin growth.
"I'm over it. I don't want to try to catch her up to zero. I do not want to try to squeeze all the juice out of this lemon. I do not want to think about it. It looks like the time has come , ”said Dow.
The economist often claims that bitcoin is "based on faith" of investors. According to him, the growth of cryptocurrency in the past year was due to "belief in bikes", and the fall – a small understanding of the technology by most traders.
“They saw the price go up, and wanted to grab a piece. The imagination of people can lead them into unknown jungles when they ignore the facts and do not understand the question. Because of this, the bubble has become much bigger and more brutal. I have observed certain psychological signals that indicate the end of a fever , ”he explained.
Bitcoin for the last day played another 9% of the cost and is trading at around $ 3,850 at the time of publication.
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