Barry Silbert, founder and CEO of crypto investment giant Grayscale Investments’ parent company Digital Currency Group (DCG), revealed that his firm has opened a $1 million short position on Dogecoin (DOGE), betting on the token’s decline.
“Okay $DOGE peeps, it’s been fun. Welcome to crypto! But the time has come for you to convert your DOGE to BTC,” Silbert tweeted yesterday.
Okay $DOGE peeps, it’s been fun. Welcome to crypto!
But the time has come for you to convert your DOGE to BTC
[disclosure: we’ve gone short DOGE via https://t.co/s8Qde2Ub4Z]
— Barry Silbert (@BarrySilbert) May 8, 2021
“It’s time to Barry this DOGE”
To open his short position, Silbert used a margin token called DOGEBEAR on crypto derivatives exchange FTX. According to the description, it’s an “ERC-20 token which seeks a return that corresponds to -3 times the daily return of Dogecoin.” In other words, the token allows traders to open a short position with a 3x leverage without using perpetual contracts or margin trading.
This means that if DOGE’s price drops by 10%, for example, DOGEBEAR will grow by 30%. Additionally, such positions are unlikely to get completely liquidated since the exchange automatically sells portions of the assets used as collateral to preserve users’ tokens. Ultimately, to fully liquidate a DOGEBEAR position, Dogecoin’s price would need to surge by 33% or more.
So do you make word jokes at the office, like it’s time to Barry this $DOGE? pic.twitter.com/JIJVdXvu3G
— Nicky Tellekamp (@NickyTellekamp) May 9, 2021
Silbert also revealed that DCG’s position is worth $1 million and the company used its “non-U.S. entities through which we operate parts of our business” since FTX doesn’t serve users from America.
— Barry Silbert (@BarrySilbert) May 9, 2021
“Heads we lose, tails we lose. We’re giving money away to charity one way or another. I don’t mind being the only person speaking up,” he added.
Anticipating the “Musk effect”
Interestingly, Silbert’s announcement came just a few hours before the latest episode of Saturday Night Live, featuring Tesla and SpaceX CEO Elon Musk, aired yesterday. As CryptoSlate reported, Musk saying that Dogecoin is a “hustle” during the Q&A section led to a 30% decline in DOGE’s price.
Notably, some Twitter users expressed skepticism toward DCG’s attempt to short Dogecoin. Even Peter Schiff, CEO of Euro Pacific Capital and a well-known Bitcoin critic, argued that Silbert’s decision might be considered questionable.
When you live in a crypto glass house you shouldn’t throw digital stones.
— Peter Schiff (@PeterSchiff) May 9, 2021
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