Digital Currency Group CEO Barry Silbert announced that the Grayscale parent company opened up a $1 million short position on Dogecoin and bet on the token’s decline as we read more in our latest Dogecoin news.
He tweeted:
“Okay $DOGE peeps, it’s been fun. Welcome to crypto! But the time has come for you to convert your DOGE to BTC.”
To open a short position, Silbert used a margin token called DOGEBAR on the crypto derivatives exchange FTX. As per the description, this is an ERC20 token that seeks a return that will correspond with 3 times the daily return of Dogecoin. In other words, the token will allow traders to open a short position with three times the leverage without using perpetual contracts or margin trading.
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
This means that If the DOGE price drops by 10%, DOGEBAR will grow by another 30% and these positions will unlikely get completely liquidated since the exchange automatically sells portions of assets used as collateral to preserve the users’ tokens. To fully liquidate the DOGEbar position, Doge’s price will need to surge by another 33% or more. Digital Currency Group CEO revealed that the DOGE position is worth $1 million and the company used the non-US entities through which they operate parts of the businesses since FTX doesn’t serve users that don’t live in America:
“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.”
— Zack Voell (@zackvoell) May 8, 2021
Barry Silbert’s announcement came a few hours before the latest episode of Saturday Night Live where Elon Musk mentioned the coin. Musk said that DOGE is a “hustle” during the Q&A section that led to a 30% drop in the price. Notably, some users expressed skepticism towards DCG’s attempt to short the coin and even the CEO Of Euro Pacific Capital Peter Schiff argued that Silbert’s decision could be considered questionable.
As recently reported, For weeks, DOGE holders were looking forward to Elon Musk hosting the Saturday Night Live and were waiting to see if the token’s biggest fan will use his appearance to promote the coin. He mentioned the token a few times over the course of the show but it didn’t really sned the price as high as many hoped. The price of DOGE eventually crashed from its all-time high of $0.66. The sell-off coincided with problems on the Robinhood trading app.
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