For some investors, even betting on a bitcoin bubble is too risky. 

According to S3 Analytics, short sellers looking for bitcoin exposure have turned to shorting bitcoin-related stocks instead of going all in on the cryptocurrency. 

"If all the talk of bitcoins makes you think of a beautiful field of Dutch tulips swaying in the wind, then you might be looking for alternative ways to gain exposure to the asset without buying or selling the actual coin or trading futures contracts," S3 wrote in a Tuesday note.

With that, then, there are stocks that can offer exposure to the crypto class and its blockchain technology without all the risk. "Short sellers have begun to use these stocks as a bitcoin short proxy instead of outright or futures bitcoin trading," said S3.

When bitcoin futures opened on Sunday, Dec. 10, "long sellers dipped their toes into the water while short sellers primarily look at the trading activity from the comfort of their cabanas," S3 noted. Short sellers were reluctant to cannonball in because of thin trading volumes that could hinder short exit strategies, their tendency to avoid accumulating exposure during rallies and a widespread broker decision to wait several days before transacting. Plus, S3 said, "the cash settlement of the contract hindered arbitrage trading."

Short sellers then piled in on bigger stocks with exposure to blockchain or crypto classes -- that means more trading liquidity and diversity.

  • "They can get outright short bitcoin exposure by shorting Bitcoin Investment Trust (GBTC) , HIVE Blockchain Technologies Ltd. (PRELF) , MGT Capital Investments Inc. (MGTI) and Marathon Patent Group Inc. (MARA)
  • Short both the financial sector and bitcoin by shorting Goldman Sachs Group Inc. (GS) and Morgan Stanley (MS)
  • Short the chip sector and bitcoin by shorting Nvidia Corp. (NVDA) and Advanced Micro Devices Inc. (AMD)
  • Short e-commerce and IT services by shorting International Business Machines Corp. (IBM) , Riot Blockchain Inc. (RIOT) , Overstock Inc. (OSTK) , Square Inc. (SQ) and Shopify Inc. (SHOP)
  • Finally short financial infrastructure and bitcoin by shorting CME Group Inc. (CME) and Cboe Global Markets Inc. (CBOE) ." 

"Short sellers will now have several avenues to accumulate short Bitcoin exposure," S3 said. "What was once a one-way market has turned into a multi-lane expressway going both north and south."

Nvidia is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio . Want to be alerted before Cramer buys or sells NVDA? Learn more now.

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