A hedge fund manager who went short on Bitcoin at the height of its euphoria last December has closed out his position a year after he opened it. Clearly he’s made a long-awaited decision after watching the cryptocurrency fall over 80% in value during the period. Mark Dow tweeted that he was “saying goodbye” to his epic short, adding that he had no intention of now opening a long position.
Today I say goodbye to the bitcoin short. Sad! #bitcoin $BTC $XBT.
— Dow (@mark_dow) December 18, 2018
Fueled by Hype
Shorting a stock is essentially placing a bet that a particular stock will fall in value, which is precisely what Dow did when Bitcoin hit a peak of $19,800 last year. Dow realized that the bull run was being fueled by hype rather than fundamentals and acted when he believed the market had reached its height, telling Bloomberg that he “…saw the psychological hallmarks of it (hype) and there came a point where it looked like the fever was breaking.” At this point Dow placed his short, keeping it open through the whole of 2018 as the entire cryptocurrency market retraced almost all its gains during that time. Dow added that he had now ridden the short down as far as he wanted to, saying he didn’t want to think about it anymore.
When asked on Twitter about his future plans for Bitcoin trades, he responded: “I doubt I’ll ever short it again. And absolutely zero interest in going long.”
Are You Watching, Bill Gates?
Dow’s immensely profitable short will be news to Bill Gates who said in May that he would short Bitcoin “if there was an easy way to do it”. Dow didn’t state how long it took him to perform his short, but presumably it involved logging into his platform of choice (or at worst, registering), setting his target price and clicking his mouse.
Dow may have closed his short just at the right time with the market enjoying some respite and Bitcoin moving up 17% in three days. Even if Bitcoin drops further, taking the money and walking away at this point is undoubtedly the best move.
