Many people and even financial institutions believe there is a bubble in Bitcoin and other cybercurrencies, but why aren't they taking any action? Of course, some may have already taken actions; however, there is any known significant large short position created by any financial institutions. It is hard to short Bitcoin or burst the bubble because of several reasons.
Firstly, if you want to short something, you need to find someone who is willing to long it, then a contract can be made. However, no financial institution would like to offer investors to place short positions on Bitcoin, so no one can find an institution that allows them to massively short Bitcoin. Secondly, Bitcoin is not very liquid, it is very hard to convert Bitcoin into fiat money, this restricts either one time long position size or one time short position size. Thirdly, the transaction cost for Bitcoin is very high, the high transaction cost (including time consuming) makes any investment in Bitcoin less attractive. Fourthly, to burst a bubble requires some degree of market power or coordination. However, to create coordination may lead to information leak. If the market receives the information of potential coordination to burst the bubble, the market will react ahead before the short side traders coordinate and take actual actions.
Because of these reasons, shorting Bitcoin is not many people's choice.
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