There are few credit facilities with bitcoin, making borrowing bitcoin to buy it back later (at a lower price) nearly impossible. Also all of the places that would or claim to allow one to go bearish on bitcoin - whether short or with options or futures - are very illiquid, there is nobody there to trade with.
I noticed that it could be possible to short bitcoin with litecoin (ltc).
It is really a pair trade based on the convergence and divergence of the two currency's prices, and can be executed on the exchanges Vircunex and BTC-E
lets say LTC/BTC = .006 , where one could sell 1 litecoin for .006 bitcoins.
litecoin prices in USD are $.43 per coin, bitcoin prices are $70 per coin $.43/$70 = $.0062
Bitcoin and litecoin prices have diverged from their pricing against a basket of currencies (USD and EU). Assuming these currencies were to converge again, then litecoin's ratio against bitcoin will increase as bitcoin decreases in USD. (Letting one sell their litecoins at a profit, for bitcoins at a lower price)
Anyone wanting to short bitcoin can buy litecoin and wait for a pullback in bitcoin prices.
The advantages of this against actual short selling bitcoin is that mathematically, short selling has an unlimited risk. In a pair convergence trade, your maximum loss is zero if litecoin is decided to be worthless.
The pair can keep divergence, as in, bitcoin can continue increasing in value and litecoin can continue decreasing in value.
Many people have their doubts about bitcoin's continuous surge in pricing, despite the mismanagement of fiat currencies. This will enable people to act on those sentiments and short bitcoin, synthetically.
EDIT: despite USD price correction, the litecoins I bought for .006 bitcoins are now .02 bitcoins each, representing a 3x gain in bitcoins. Allowing me to buy bitcoins low, as I hoped. As always though, the currency pairs could converge.
