Bitcoin Bears Unleashed? Interactive Brokers Folds, Will Allow Clients To Short Futures

A week after Thomas Peterrfy, the founder, Chairman and CEO of Interactive Brokers and one of the 'giants' of electronic trading in US financial markets warned that:

"the introduction of bitcoin futures into a clearing house could increase systemic risk."

And just days after the firm said its

"clients would be unable to short the bitcoin futures market because of the extreme volatility of bitcoin."

Interactive Brokers has reportedly flip-flopped and as Bloomberg reports, plans to let bitcoin bears bet against the digital currency’s recently debuted futures contracts.

Starting this week, the brokerage will allow its users to take short positions on bitcoin futures under certain conditions, according to company spokeswoman Kalen Holliday, who said the decision was made “in response to client demand.”


Interactive Brokers has accepted long positions with a margin requirement of at least 50 percent since the contracts debuted Sunday on Cboe Global Markets Inc.

That is great news for the arbs who can now actively compress the $1000 Bitcoin futures premium...

Of course, as Bloomberg notes, shorting bitcoin futures, or betting that their price will fall, is potentially an even riskier strategy.

It’s possible to lose an unlimited amount of money on a short position, particularly if the cost of the digital currency and its derivatives continues to climb.

Bloomberg reports that Interactive Brokers has a few requirements for shorting bitcoin futures, which seem to suggest this is not quite as cut and dried a short futures position as 'bitcoin bears' would hope.

  • the spread must be one-to-one, and
  • the short leg must have the earlier expiry date so that once it expires the surviving leg will be long...
  • Trading won’t be offered in retirement accounts or to Japanese residents.

Sounds more like IB is allowing traders to short the front-month against the back-month - not exactly what most were hoping for, but it's progress perhaps. For now, the news has prompted some selling pressure across the complex.

So prepare for the pending short squeeze as all 'the smartest people in the room' pile in short on this no-brainer bubble...


Laowei Gweilo Killtruck Tue, 12/12/2017 - 22:39 Permalink

since market close...1. CONS lose important Senate seat to 51-492. TAX corp rate getting bumped from 20 to 21, maybe higher3. FED [probably] raises rates tomorrow4. South Korea announces that Friday they'll likely either ban or heavily regulate Bitcoin and cryptos -- both will heavily lower volume5. BTC shorts announced by key brokerages Get ready for general broad macro bearish sentiment for ALL investments (equities and cryptos) and taking profits before year end :O

In reply to by Killtruck

peterk economessed Wed, 12/13/2017 - 01:33 Permalink

so shorting furures at 50% margin is 2:1 leverage.uselessbitcoin exchanges give 3:1  minium even to 100:1 and that direct 24 hour trading ... none of this 9-5 crap of the exchanges with zero  liquiidity.But hey IB and equity  side of  industry is always behindLong gone are the days of 100:1  stock leverage  of the 1930's..... 4 :1 is like max 

In reply to by economessed

Exponere Mendaces Tue, 12/12/2017 - 22:28 Permalink

Love how ZH cheerleads the slightest wiggle in price with some backwards-looking "news" event.You can short Bitcoin on other exchanges, IB is just the first commercial retail allowing you to do so.But please, don't let me interrupt the excitement over Bitcoin trading at levels not seen since YESTERDAY.Bitcoiners know the score, we make all-time highs and retrace.No-coiners are clueless, and think every decline is the "death" of Bitcoin.See you at 20k. 

Exponere Mendaces Yen Cross Wed, 12/13/2017 - 07:18 Permalink

I thought this was "Fight Club".So, you want special treatment? Is the truth too harsh and demanding? What is "asshole" anyway in this context? I'm stating truthful facts, easily verified.The only friction you feel is because they don't jive with your internal mapping of the world. I can't help that.Bitcoin isn't going away. The technology underpinning it isn't going away. You have two choices - adapt, or get buried by history - dead and forgotten.Which will it be? 

In reply to by Yen Cross

Bunga Bunga Condition 1SQ Tue, 12/12/2017 - 23:44 Permalink

You have to really borrow the coins from someone else in order to short sell. The risk is that the buyer takes the coins "out of the system" by withdrawing them into his private wallet and hodls them there forever. It's not like a brokerage account where Wall St can play games and create shares out of thin air. Coins in a trade might need to be "delivered" within 10 minutes per buyer request. Settling cannot be delayed for days, weeks or even months (REGSHO) .

In reply to by Condition 1SQ

Exponere Mendaces Bunga Bunga Wed, 12/13/2017 - 07:23 Permalink

Bitcoin is a black hole, the center of which consists of mathematically proven cryptography.It will absorb all debt-based money until there's nothing left, expanding its Schwarzschild radius until all financial middlemen are consumed.It can't be bargained with. It can't be reasoned with. It doesn't feel pity, or remorse, or fear. And it absolutely will not stop, ever, until all fiat is dead.

In reply to by Bunga Bunga

Clock Crasher Tue, 12/12/2017 - 22:29 Permalink

once these shorts have been squeezed to death and are -200% and moving into a refrigerator card board box for shelter then bitcoin will finanlly collapse, but not before. One day closer boys.  Fire up the popcorn.  

BarkingCat Tue, 12/12/2017 - 22:31 Permalink

God I hate to say this as I do believe that Bitcoin is really worth nothing but here it goes:the blockchain is the honey badger and it don't give a shit

aloha_snakbar Tue, 12/12/2017 - 22:39 Permalink

Anyone else notice how the BitCon fanbois roll it up at a certain time every night? Maybe their Moms make them turn off their compukers because they have school in the morning...

Zoltan Tue, 12/12/2017 - 23:15 Permalink

While the price is going up the demand is strong and investors are happy. Once it peaks and heads back down the downside will get ugly fast.

The value in bitcoin is faith based. Who will buy in when the trend is heading lower? While there could be lots more upside we know how this ends. Congratulations to those who have done well but you should take some profits off the table while you can.


East Indian quadraspleen Wed, 12/13/2017 - 04:13 Permalink

I dont understand. Banks in India settle your transactions at 2 pm everyday. If you use a phone app to send money, it reaches the reciepient in ten minutes if the bank is open, and if the bank is closed, in the first half-an-hour the next morning when the bank opens. Why should it take 2.8 days?Banks in the west should be much faster, not slower. I am puzzled. 

In reply to by quadraspleen

any_mouse East Indian Wed, 12/13/2017 - 04:34 Permalink

Three day settlement for interbank transfers. For physical items to be shuffled about. Paper checks.

An anachronism for today's mostly domestic electronic same currency transfers.

The equities market is starting to implement two day settlement for certain stocks. Three day settlement has been the standard there as well.

Three business days, one for each leg. One from the originating bank to the clearing house. Two from the clearing house (or Federal Reserve) to the receiving bank. Three for the receiving to post the check and draw the funds from the account.


In reply to by East Indian

exartizo Tue, 12/12/2017 - 23:33 Permalink

What they don't tell you, of course is that only the privileged few Whale Clients get to short BTC.
That's obviously who was complaining. I do so hope they get their collective heads handed to them from The Mighty BTC Whipsaw Volatility.

Yellow_Snow Tue, 12/12/2017 - 23:38 Permalink

They still aren't allowing traders to SHORT XBT...  They are only allowing a spread trade - which has a LONG future with a differnt month SHORT future.  So a 'nothing burger'...

milking institute Tue, 12/12/2017 - 23:39 Permalink

Well,thats it,i'm IN! Just got a Title Loan on my 1998 chevy enchilada,(it's payed off!)  Sent Mom and the Sister down to the Blvd tonight,told them to put out or else....Will buy 1/8 Bitcoin tomorrow,i hear it's going to 87000.00!  wait..,thats my sister calling,she got arrested? they want 2000.00 Bail.  fucking women,i told them to stay clear of the 711!  Well i still got the 875.00 from the loan,where should i buy, coin base?  any suggestions? i'm going to be rich!!!

spdrdr Wed, 12/13/2017 - 00:46 Permalink

Why does every article on "BitCoin" have a graphic of gold coloured coins with a "B" on them?  As far as I am aware, there are no gold coloured coins, and absolutely nothing to physically represent a BitCoin or any other digital tulip.Jesus Fucking Christ.