What goes up, must come down?
Profit from decline by shorting Bitcoin
Shorting Bitcoin - The Possibilities:
Contract for differences (CFD) are similar to futures. Traders may short Bitcoin on regulated CFD platforms like Plus500 & IGmarkets.
Like in the stock market, call and put options enable traders to short Bitcoin, using put options. Two prominent markets are Deribit and OKX.
Bitcoin futures are traded on platforms like Kraken and BitMEX. Some brokers like eToro and TD Ameritrade also offer (short) future trading.
What is Shorting Bitcoin?
The aim of shorting Bitcoin, is profiting from a (temporary) decline in value. This is achieved by ‘short selling’ which means selling the cryptocurrency at a certain price and buying it back at a lower. If the price of Bitcoin indeed goes down, the trader profits from the price difference between the moment they sold the asset, and the moment of buying it back. The profit, or loss if the price movement goes the other way, may be further amplified by using margin or leverage. Another way to achieve this, is by buying Put options on Bitcoin.