In the world of securities and foreign currency investors, the term short selling is considered common knowledge. Short selling is often combined with Margin Trading and financial leverage to increase optimal returns.
To put it simply, short selling is a form of selling first and then buying later. In this case, shorting bitcoin means selling while bitcoin is high and buying it back low through a contract with the exchange. Called 'short selling' because you do not actually buy bitcoins to sell, but that bitcoins are borrowed directly from the exchange. Take profit means you buy back the bitcoins to pay the exchange and keep the difference between buying and selling.
This tactic becomes especially effective and easy when the market is in downtrend. Many traders will take advantage of the opportunity to practice short selling, making a quick profit when prices often rise very slowly but drop very quickly.
How to short Bitcoin & Crypto with Leverage in 2021?
In order to short sell Bitcoin, you need to register an account at an exchange or broker and place a short order. The exchange then sells Bitcoins from their own supply, based on the rule that in the future you will repay them the Bitcoin or cryptocurrency you borrowed from them.
For example, if you short 1 Bitcoin, in the future you will have to pay that 1 Bitcoin, whether the price goes up or down. If the price falls, you will get a profit when buying this 1 Bitcoin. In the event of a price increase, you will have to buy back 1 Bitcoin at a higher price and you will lose money.
When you go short, the exchange is usually able to recover an asset at any given time and only need to give you a brief notice. So make sure you read any rules, regulations, or instructions for any coin or asset you intend to short.
There are many ways to sell Bitcoin:
- Short sale of CFD Bitcoin: CFD means Contract for Difference. That means that instead of actually borrowing Bitcoin, you will sell Bitcoin's price index and then buy it back at a lower price, the profit and loss will be based on the difference in price at the time you close the position.
- Binary options trading Bitcoin and cryptocurrencies: Some specialized exchanges, such as IqOption, OlympTrade, ... offer Bitcoin binary option trading. Buying an option allows, but has no obligation, to trade at a particular price for a specified period of time. If you have experience in options trading, this method may be right for you, otherwise it is not recommended for beginners. The options are complex but allow for more flexibility and higher leverage.
- Short sell Bitcoin using futures contract: Bitcoin and crypto futures contract is an agreement to buy or sell an asset at a later date at a predetermined price. It is known as a derivative because its value depends on an underlying asset. A good exchange for trading futures contracts is BTCC with leverage up to 150 times, and over 1,200,000,000 USDT daily trading volume (especial in the South Korean market
Steps to short sell Bitcoin & Crypto futures at BTCC exchange?
Now we will go into the steps to short Bitcoin and cryptocurrencies futures on BTCC to make a profit. Here are the steps you need to take:
Step 1: Create an account on BTCC. Easy and takes about 10 minutes to do. Provide your email and password.
Step 2: Refill your newly created account at BTCC, you can transfer USDT here and BTCC is offering promotions up to 2000 USDT deposit bonus.
Step 3: Analyze various short selling options on BTCC. BTCC offers a number of different opportunities to sell Bitcoin and other cryptocurrencies like Ethereum, Lite coin, XRP, BCH, ...
Step 4: Select leverage and execute to choose the price you want to short sell
When should short sell Bitcoin?
Short selling Bitcoin is a transaction that predicts the price of Bitcoin will go down in the short or long term depending on your strategy; However, maintaining or holding short positions in Bitcoin in the long term brings a lot of risks because Bitcoin price is currently in a global uptrend.
When making a short sale, you need to keep in mind that the maximum profit in a Short sale is when the Bitcoin price is zero, while a buy has no limit on profit margin. In any financial market from stocks to cryptocurrencies, there is a motto that 'the price will crawl slowly up but if it goes down it will go down by elevator'. When bullish moves take time to accumulate and develop, on the contrary, downside moves tend to be clear and fast. Because bullish moves are always accompanied by suspicion and take profit actions, while a bearish move is accompanied by fear and sell-off, cut loss regardless of price.
Trying to short from the top of a bull run is very difficult, you will likely have to stop losing multiple times as Bitcoin keeps going up like a stubborn zombie. And each time traders short their stop loss means they have to repurchase the amount of Bitcoins they sold. This also contributes to the price of Bitcoin going up.
Why do investors short sell Bitcoin?
Short selling can be used for speculation or hedging. Speculators use short selling to profit in the bear market. Hedgers use strategy to protect profits or minimize losses in a portfolio.
Note that institutional investors and savvy individuals often engage in short selling strategies for both speculative and hedging purposes. Hedge funds are one of the most active short sellers, often making short-term profits from selected coins or fields to protect their long-term plans in other coins.
Short Bitcoin is a great way to make big money fast, but also risky. When you borrow Bitcoins and sell them high, then buy them back when the price is low, you can make money even when the market is bleeding. For traders new to the market, it is not advisable to go short as this process requires rigorous calculation and trading experience. If you decide to short Bitcoin, make sure you only invest money you can afford to lose. Also, make sure to stay up to date with current relevant events so that you can anticipate any change in price direction.