Learning how to short bitcoin or other cryptocurrencies can be rewarding. Shorting is a form of trading where you buy an asset and then sell it before the first trade has been settled. It means that if the value of bitcoin decreases, your position will turn into a profit. Shorting does come with some risks, so you should be careful which assets you are shorting. In this blog post, we will explore different ways of shorting cryptocurrencies like bitcoin or other altcoins!
Margin Trading
The advantage of margin trading is that it allows you to amplify your profits if the market moves in your favor. However, margin trading also comes with a lot of risks. Currently, no exchanges offer margin trading for cryptocurrencies as they do with traditional stocks and forex pairs, such as Bitfinex or Kraken.
However, some cryptocurrency exchanges let you borrow funds from other users to short bitcoins and altcoins. It works just like lending money on a credit card. You will need to put up the initial margin for the trade, and then you will be able to borrow the rest from other users on the exchange.
Futures
Another way to short bitcoin and other cryptocurrencies is through futures contracts. Futures are agreements between two parties to buy or sell an asset at a specific price on a future date. The beauty of futures contracts is that you don’t have to own the underlying asset to trade them! You can go long or short without ever having to take delivery of the purchase. Bitcoin futures contracts are available on a few exchanges, such as the Chicago Board Options Exchange (CBOE) and the Chicago Mercantile Exchange (CME). To short bitcoin using futures, you will need to margin-trade them.
CFD Trading
CFD trading is another way for shorting bitcoin and other cryptocurrencies. CFDs, or Contracts for Difference, are derivatives that allow you to trade an asset without owning it. You agree with the broker to buy or sell an asset at a specific price on a future date. You can do it through a regulated exchange, such as eToro, or a less regulated broker. Some cryptocurrency exchanges offer CFDs for different cryptocurrencies and tokens. For example, on Avatrade, you can trade bitcoin against ripple (XRP) and NEO. It makes it easier to short altcoins than dealing them directly!
Binary Options
Binary options are another way for shorting bitcoin and other cryptocurrencies. Binary options are trading instruments that only pay a fixed amount, whether you win or lose your trade. It makes it easier for beginners to understand how binary options work! To short bitcoin and other cryptocurrencies with binary options, you will need to find a broker that offers them.
We hope this blog post has been helpful! So, what are you waiting for? Start shorting bitcoin and other cryptocurrencies today!
