There are several leading Bitcoin trading platforms, such as Deribit, that are not available to American investors due to regulatory compliance issues. These derivatives are based on pricing; fluctuations in the cryptocurrency’s price have a domino effect on investor gains and losses. If you buy a futures contract, you are betting that the price of the security will rise; this ensures that you can get a good deal on it later. If you sell a futures contract, it suggests a bearish mindset and a prediction that Bitcoin will decline in price.

This creates buying pressure, which can drive the price up even further, leading to even more short sellers covering their positions and causing a rapid price increase. This situation can result in massive losses for short sellers and illustrates the high-risk nature of short selling. Bitcoin futures trading took off around the run-up in cryptocurrency prices at the end of 2017. You can short Bitcoin futures at the Chicago Mercantile Exchange (CME), the world’s biggest derivatives trading platform, and on some cryptocurrency exchanges. Bitcoin futures can be purchased or traded on popular exchanges like Kraken or BitMEX and can also be found at popular brokerages such as eToro.

What Are the Risks of Shorting Bitcoin?

For example, say you want to trade $3000 worth of BTC, you will probably need to have at least $1000 worth in flexible staff augmentation for uncertain times your margin wallet before the exchange will lend you funds. Unlike any other platform, we allow you to trade in just one step between any supported asset. To execute your order automatically, select the Borrow tab within the ‘Sell’ panel.

This article will guide you through the process of shorting Bitcoin and other cryptocurrencies, offering insights into how it works and where you can execute these trades. Prediction markets are markets where you speculate on the outcome of events. Cryptocurrency prediction markets are relatively new, but do present an opportunity to short bitcoin. Finally, select the “Close” button on the right of the open position. You can also choose to close all your positions at the current market price by selecting the green “MKT Close All” button.

Where can I short cryptocurrency?

Many exchanges offer demo trading accounts to help you understand the fundamentals before trading using your capital. Another consideration when trading on leverage is liquidation fees. This is the percentage the exchange charges as a penalty for exceeding your margin ratio. Leveraged tokens represent a basket of perpetual contracts and move based on futures price fluctuations. If you sell 1 BTC for $30,000 and the price decreases to $27,000, you stand to make about $3,000 profit, as opposed to $1,000 if you had not leveraged your account. To short-sell Bitcoin, you’ll need a trading account and a clearly mapped-out trading strategy.

When you visit the margin trading page, the BTC/USDT (Bitcoin / USD Tether) trading pair will be selected by default. However, if this is not the case, use the selection panel to search for the right BTC pair. It represents the most straightforward implementation of the short-selling concept compared to the other methods available. It is ideal to choose a stablecoin as it is then easier to track prices in relation to the U.S. dollar. However, with crypto being the focal point of this discussion and BTC being the most dominant crypto, this discussion requires additional detailing. Jeremy then repurchases Bitcoins using the $60,000 he held from the initial sale of his holdings.

• This is typically the case days prior to a major catalyst, as crypto traders lock in their gains before a volatile event like the Bitcoin halving.
• If you’re holding an open futures long position, you could short Bitcoin CFDs hedging your trade and mitigating risk.
• Therefore, there isn’t sufficient data or information for investors to make an educated decision about its workings or feasibility as an asset.
• It offers margin trading options with up to 10x leverage for isolated margin accounts.
• If you are bearish on crypto, you can buy put options on many different crypto ETFs and stocks.

Crypto options trading

Clever use of a short-selling strategy allows a trader to make money when the price of BTC is falling. The most obvious time this would be useful is during a Bitcoin bear market, like that of 2022, when BTC plunged 65%. While the origins of the terms are unclear, they’re universally used what is bitcoin and why is the price going up today across stock, foreign exchange, commodity, and cryptocurrency markets.

However, if you reside outside the US, you can go short crypto with CFDs on popular platforms like IG. With Bitcoin sometimes doubling in price before any significant pullback, shorting it could be a risky endeavor. That being said, there are plenty of people who’ve made a significant amount of money through short-selling and making investments that seem to go against the grain. Futures contracts are agreements to buy or sell Bitcoin at a predetermined price at a specific date in the future. By entering into a futures contract, you can speculate on the price movement of Bitcoin without owning the actual cryptocurrency. Trading on margin involves the risk of loss of your entire margin account balance.

• As the name suggests, inverse Bitcoin ETPs are specialized instruments that track the price of BTC with a twist.
• If the market price is unfavorable, you can allow the put to expire, and you only lose the premium you paid to set it up.
• BTC prices have rallied in recent weeks due to rampant speculation regarding the Bitcoin halving that’s due to happen in April 2024.
• To execute your order automatically, select the Borrow tab within the ‘Sell’ panel.
• Shorting a crypto asset means that traders expect the same to go down in time, maybe even crash.
• Shorting Bitcoin involves betting on a lower price through futures contracts.

This will act as a guarantee that you can buy the cryptocurrency at the price you are placing your bet on. The other way of shorting Bitcoin is through the prediction market. The prediction market is nearly similar to the ordinary market, only that in this case, you are betting on the future price movement of Bitcoin. Just like the traditional financial market includes futures trading, Bitcoin and the entire cryptocurrency space does too.

Should you short crypto in 2025?

Most of the time, the price of Bitcoin will reverse after it has followed one trend for a long time. Technical analysis is based on the theory that history will repeat itself in terms of prices and the market trend. This past information can then be used to make informed decisions about the future. If you are a cautious trader, you might want to choose an order type that will enable you to limit losses.

There are, however, many different ways to profit from a digital asset falling in value. In this article, we’ll explore the 7 different ways to ‘short’ bitcoin, ethereum (ether), and other cryptocurrencies. A CFD (Contract for Difference) is a contract between two parties that speculates on the price of an underlying asset – in this case, Bitcoin. These investment derivatives allow you to “bet” on the price of Bitcoin without having to actually purchase it. If you already have experience trading cryptocurrency, the most natural way for you to short Bitcoin is on a cryptocurrency exchange.

Inversely, if BTC rises in price, your leveraged token will auto-rebalance, reducing the margin to cap losses and avoid liquidation. However, unlike futures, losses are limited to the purchase price of the options contract and cannot rise or fall indefinitely. Mismanaged trades have the potential to unravel quickly and your collateral can be liquidated (taken by the exchange to cover losses).

If you are bearish on crypto, you can buy put options on many different crypto ETFs and stocks. It is common for 100%+ bull runs to be proceeded immediately by 50% crashes. We received a significant number of search queries from people wondering, “can I short Bitcoin?

Can I short Bitcoin and other cryptocurrencies?

Typically, taker fees are higher than maker fees as you’re removing liquidity from the market instead of providing additional tradable funds. Although liquidation is not a concern, if the market moves against you, you may be forced to purchase BTC at a higher price than you sold it for. However, hedging is a complicated strategy and not recommended for beginners as it typically does not how to buy bitcoin on binance involve a stop loss. Assume you have a $10,000 account size and leverage it 3x – you now have $30,000 to use for your trades.