Can You Short Sell Bitcoin 5 Ways To Short Btc
Cryptocurrency trading platforms have evolved rapidly over the years and created different ways for people to short sell Bitcoin. This is an advanced method to hedge a crypto portfolio or profit from sudden volatility. Shorting Bitcoin, or otherwise known as short selling Bitcoin can result in massive profit potential but does carry risk. In this guide, we explain what is Bitcoin shorting and when to do it.
Which Exchanges Allow For Shorting The Market
Bittrex has still not opened their sign-ups and I’d like to look into shorting. Any suggestions?
None in USA as far as I know.
New bifinex account requires 10k deposit to open
Kraken is the only exchange accepting US customers that allows shorting, that I know of.
you’re better off using futures for that
You are crazy to short, it’s an oversold market
People can short to hedge their positions, hedge their mining proceeds, etc., not just because they want to capture the price going down.
You were wrong about this because the price dropped from 7200 to 6700 after you wrote this. I realize you might not be able to do the math, but that was clearly a good short.
Maybe not on the hour or the day but yes overall it is.
PLEASE change your passwords and enable 2FA on any exchange you use. Your original log in credentials might get hijicked if you used GMAIL recently, more on this post:
Don’t use gmail. Protonmail is better and enable 2FA on your email as well.
Bitmex is the greatest. Most volume and can win big on small risk
GDAX doesn’t do shorts any more.
Shorting is one of those things where it really does take a lot of money to make a lot of money.
How To Short Bitcoin On Bybit
Apart from Binance, you can also short Bitcoin on ByBit as well. The platform is crypto-to-crypto trade only but has many advantages of its own. Here are steps you should take to start shorting Bitcoin on ByBit.
Step 1: Register an account on ByBit. It is quite easy and lasts about 5 minutes. It requires an email address and password. Be sure to implement 2FA with Google authentication.
Step 2:;Analyze the different shorting options on ByBit. In the screenshot from the ByBit trading screen you can see what trading instruments are available for trading on ByBit.
- Inverse Perpetual
Recommended Reading: How To Buy Small Amounts Of Bitcoin
What Are The Risks Of Shorting Bitcoin
There are two main risks to shorting Bitcoin. The first one is price risk. Price volatility in the underlying asset can make it difficult to accurately predict the price movement of the underlying asset. The second main risk is the absence of a standard regulatory framework for Bitcoin around the world. Some of the biggest futures trading venues of the cryptocurrency are not regulated. This means that investors have fewer recourse options if something goes wrong with their trade.
Binary Options Trading Of Bitcoin
Another way you can figure out how to short sell Bitcoin is with options trading, which involves put and call options.
With a put option contract, you have the right to sell a specified amount of Bitcoin, which you set, at a certain price at a certain time. This is called the strike price. The put option gains value as Bitcoin loses value compared to this strike price.
Importantly, you are not obligated to sell the option if you dont want to. A call option contract gives you the right to buy shares in the same way. With this contract, you have the option to buy a certain amount of Bitcoin at a specific price until a certain datethats the expiration date.
Also Check: How To Buy Cryptocurrency On Coinbase
Best Exchanges To Short Crypto In 2021
The best exchange to short crypto is the one with a good variety of coins and good functionality. If you have already learned how to analyze cryptocurrencies and you are sure that the market is going to fall, then you need to pick up a good platform that allows shorting.
A lot of new and more experienced traders are asking the same question, where can I short crypto? It is a great way for traders to make money with crypto daily if you know how it works.
Since Ive been trading for many years and I know where to do it, I will pass on my knowledge in this article and make a review of the top 5 exchanges I know.
Can you short crypto on any exchange?
No, you cant. Crypto exchanges that allow shorting are platforms that allow margin trading. These exchanges might be hard to find, and for beginner traders, its difficult to know where to look.
The second question I get asked is, how do you short crypto?
Keep reading to learn more about how to do it.I will go through the top 5 crypto trading platforms that allow you to short cryptocurrency. There will also be a step-by-step guide on how to short crypto for each exchange.
No matter if you are an experienced trader or just starting, this review will bring value to you. If you are in a hurry, check the exchange comparison table below. I recommend that you read through the review before you start shorting.
When Is The Best Time To Short Sell
Shorting Bitcoin means trading against a positive trend. The longer this trend continues, the riskier the trade becomes.
One thing you have to know is that the maximum profit you can make on a short sell is limited to a Bitcoin price of $0 while theres no cap on buyers returns.
If you look at Bitcoin charts, you will soon realize that the old adage prices take the stairs up, but the elevator down is very true. Bullish moves tend to take a lot of time to materialize, but down movements tend to be relatively shorter and steep.
Trying to time a big bull run can be tough with Bitcoin. Its likely that you’ll stop out many times as Bitcoin keeps coming back like a stubborn zombie.
Also, if many traders took the same position, you could see a sudden price surge as scared traders compete to complete their short order . This is referred to as a short squeeze.
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How To Short Bitcoin And Other Cryptocurrencies
Want to make gains while Bitcoin price is decreasing? Its possible. A short position on Bitcoin basically means that we believe in a coming-up drop in the price of Bitcoin. Technically, short positions work by selling the base asset first, in this case, Bitcoin, and then later buying it. You dont have to worry; the exchanges do this process automatically for us.
The second role for shorting Bitcoin is the option to hedge a cryptocurrency portfolio. For example, if the crypto portfolio consists of 5 Bitcoin and we want to hedge against the risk of a possible Bitcoins decline, a 10X leveraged short position could be opened, and it would be equivalent to 40% of that Bitcoin portfolio.
To open the position, the amount required is only a tenth of it . That means that we need to hold only 0.2 Bitcoin on the margin exchange in order to hedge 40% of a portfolio valued 5 Bitcoins. Another advantage is the fact that only a small amount is stored on the exchange itself. As you might notice, from security reasons, its better to store the least amount possible on crypto exchanges.
How To Short Cryptocurrency
Because of the high volatility, shorting is a very popular trading method in cryptocurrencies, and one can profit massively from it.;
Lets see how short trading works in Bitcoin.
For instance, by analyzing technical charts or by any fundamental development, you predict the Bitcoin prices to crash by 5% from the current level. Therefore, you can initiate a short position in Bitcoin to profit from this expected market move.;
Depending on your cash position and available margin, you short sell Bitcoin at the prevailing price. This means you borrow Bitcoin from the market and sell them at the prevailing price. If the price of Bitcoin falls as per your expectation, you repurchase them at that level and settle the position.;
The difference between the selling price and buying price is your net profit. However, while Bitcoin shorting, you need to place a strict stop loss to reduce the risk of losses from probable deviations.;
There are three ways through which you can initiate a short position in cryptocurrencies:
- Options trading
As easy or thrilling it may sound, shorting Bitcoin or any other cryptocurrencies is very risky as you trade on the borrowed Bitcoins. And, in adverse conditions like the dramatic rise of the price of Bitcoin and cryptocurrencies, the exchange may ask for additional margin money or square off your position if it falls below the maintenance margin level.;
Also Check: How Do I Access My Bitcoin Account
Regulations Related To Crypto Margin Trading In The Usa
In the United States, cryptocurrencies are completely legal and can therefore be bought and sold. Unlike in Japan, where Bitcoin is an official currency, cryptocurrencies are classified as commodities in the USA. The only cryptocurrency allowed in the form of futures derivatives is Bitcoin. The crypto reserve currency is therefore traded on the American stock exchange one of the largest platforms is CME Group³, for instance.
However, this admission only affects Bitcoin and only a specific trading product . All known cryptocurrency derivative brokers offer margin trading products that are not yet licensed in the USA. For this reason, it is not yet possible for such companies to be licensed and permitted in the US. In this case we are talking about the well-known international Bitcoin brokers like BitMEX, Bybit, PrimeXBT, PrimeBit and a number of other Bitcoin margin trading providers.
The whole regulation thing in the USA is even still a little bit more complicated, since the individual states all still have their own laws concerning financial services etc..
To cut a long story short, the cryptocurrency brokers have no chance to legally offer their services to US citizens at the moment. This even applies to US citizens who do not live in the USA.
This situation is likely to continue for the foreseeable future. We are not aware of any indications that this legal situation for Bitcoin Margin Trading in the USA will change soon.
Binance Best For Beginners
Supported cryptocurrencies to short on Binance
Binance is a centralized cryptocurrency exchange and they currently support trading in 180+ and support short selling in 24 cryptocurrencies.
Here is a full list of all supported cryptocurrencies to short-sell on Binance:
Here is a snapshot from a blog post from 31 December 2019.
This is the latest post from the exchange but Im sure theyve already added a few new coins.
I will check for updates and add the new coins as they come up.
Short sell trading fees on Binance
The basic trading fee for short selling on Binance is 0.10%.
This is the same fee for any new trader on the platform, this is where you start.
Take a look at this fee table.
You start at 0.10% and the more trading volume you have each month, the lower your trading fee gets.
If you trade big enough you can reach a trading fee of 0.04%.
They are almost at forex spreads.
This is very good if you are planning on trading with a lot of leverage or very often.
Binance is offering 125x leverage on their Bitcoin futures.
So it really helps to keep the trading costs low.
How to short crypto on Binance Step by step guide
So, how do you short-sell crypto on Binance?
Youve now successfully shorted your first cryptocurrency on Binance.
Not very difficult.
Recommended Reading: What Crypto Currencies To Invest In
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Long And Short Positions
The trading world is full of intricacies but the fundamentals remain buy when it’s cheap, sell when it’s highest, and make a profit. To earn a steady income, traders must be decisive when opening, closing, and changing an order.
Long and short orders are infinitely distinct. Going long essentially means buying crypto with the expectation that its market value will rise. Opening a long position of a BTC/USDT pair means buying just when you think the time is ripe and selling when the BTC to USDT grows.
Opening a short position does not imply a short-term deal. When an investor goes ‘short’, they borrow crypto to sell at the current market price. When the value of the asset drops, the investor buys the asses at lower prices, repaying the crypto borrowed and making a profit of the difference.
How Does A Bitcoin Short Work
In simple terms, shorting bitcoin allows you to borrow an asset or financial instrument such as bitcoin and sell it at its current price. With perpetual futures contracts like those available on Bybit and Phemex, youll then pay back the person you borrowed from at a later date and rake in the difference.
Of course, in order for this to be a profitable trade, bitcoins price will have to drop after you short it. This means that it will be cheaper to pay back the person you borrowed from.
To illustrate this point, consider this example:
You short 2 bitcoin when the price is $18,000.
This means youve borrowed 2 bitcoins to sell them for $36,000.
The bitcoin price then drops to $17,000 and you close your position. This is done by repurchasing the 2 bitcoin you borrowed at a lower price .
As such, your profit is $36,000 $34,000 = $2,000.
On exchanges like and Phemex, you can even leverage your short trade up to 100x. This increases the risk proportionally while also increasing the prospective rewards or losses. Check out the Bitcoinsensus how to trade bitcoin guide for more info!
Prime Xbt Best For Advanced Traders
Supported cryptocurrencies to short on Prime XBT
Prime XBT supports short trading in 5 cryptocurrencies at the moment.
I think this list of coins will increase over time as this trading platform is steadily increasing in popularity.
As I mentioned before, to be able to short-sell crypto on an exchange, there has to be margin trading involved.
On Prime XBT you will enjoy up to 100x leverage on all cryptocurrencies:
These are some of the most popular coins on the market and they are providing high levels of leverage in all of them.
For some traders, I would not recommend trading with 100x leverage since it takes a lot of skill to manage entries.
Especially since the crypto market is so volatile. Its easy to get stopped out with tight risk limits.
However, if you are an experienced trader you will benefit greatly from this high level of leverage.
Once I learned how much leverage I was comfortable trading with I started making more steady gains while trading these altcoins.
Short sell trading fees on Prime XBT
The fee for short selling cryptocurrencies on Prime XBT is 0.05%
I wanted to show you the fees on every exchange for short-selling cryptocurrency.
Many people are asking, can you short-sell crypto with the same fees?
The answer is yes.
The fees dont change depending on which direction your trade is.
Lets take a look at the fee table for Prime XBT and I will explain.
Prime XBT has a 0.05% taker trading fee.
One thing to keep in mind though.
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How Does Shorting Work
Put simply, shorting works by allowing you to borrow from a broker or person so you can sell an asset like Bitcoin at a set price and buy it back. This means that you will be buying the Bitcoins at a later date and repaying the broker or person you borrowed them from.
The hope is that the price will have dropped by the time you have to repay the asset, in this case, Bitcoin. This way, it will be cheaper to buy the assets that need to be replaced.
Lets look at a short example of how this is done:
You short sell 5 Bitcoins when the price is $4,000
This means that youre borrowing 5 Bitcoins and selling them back at $20,000
The price of Bitcoin drops to $3,000
You buy the Bitcoins back at $15,000 and return them to the party you borrowed them from
You keep the profit $20,000-$15,000 = $5,000