The Bears Are Targeting Cyrptocurrencies
At the height of the South Sea Bubble close to 300 years ago, a wag famously made fun of the craze by issuing a prospectus for “a company for carrying out an undertaking of great advantage, but nobody to know what it is”. Cryptocurrency mania has now what some believe they have reached the same stage.
This summer a newcomer to software and developer world initiated what he phrased as the “Useless Ethereum Token”, an “initial coin offering” of a variant of a cryptocurrency whose popularity rivals that of the more famous bitcoin.
Yet this was the “world’s first 100 per cent honest” ICO, he promised, and was admirably transparent about its purpose.
“You’re literally giving your money to someone on the internet and getting completely useless tokens in return,” he wrote on the UET website. “There are no ‘whitepapers’, no ‘products’, and no ‘experts’. It’s just you, me, your hard-earned Ether, and my shopping list.” The ICO raised more than $200,000, according to the backer.
Underscoring the sense that the cryptocurrency mania is reaching frenzied proportions, Paris Hilton, who is known for trademarking her catchphrase “that’s hot”, hopped on the bandwagon and told her followers to check out the latest cryptocurrency offering, LydianCoin. Many investors are unimpressed.
“In my view, the mania for raising funding via the blockchain has all the aspects of a classic bubble, including a lot of schemes that would make the original South Sea Bubble operators blush,” Mark Tinker, a fund manager at Axa Investment Managers, said in an email to his clients.
However the question for investors who have thing for betting on the mania imploding is how exactly to “short” the various digital currencies?
Bitcoin and other various cryptocurrencies have recouped some of the losses that came after a Chinese ban on ICOs, which are almost equal to an unregulated corporate share offering, yet some investors want to profit from what many think is an inevitable crash.