How To Short Bitcoin? 7 Effective Ways For Shorting Bitcoin
All the investors expect to have a rise in the value of the cryptocurrency they purchase. But that does not happen all the time. Short selling can be effective in such instances.
What Is Shorting?
Short selling or shorting is a financial strategy for the investors to earn some profit when the price of a crypto asset drops suddenly. Shorting’s main aim is to sell crypto assets when the price is higher and then purchase them again when the price falls. Here are some effective ways for the users to short Bitcoins.
- Binary Options Trading
Call and out methods are good for shorting Bitcoins. You will need an escrow provider to place an order in binary options trading. Thus it will be clear that you are about to sell your crypto asset at today’s price without the consideration that the price may fall later. Several overseas markets provide binary options. However, they are expensive and there are a lot of risks associated with them.
- Bitcoin CFDs
Contract for Difference is known as CFD and it is a financial strategy where the users will be paying the difference instead of borrowing, selling, and repurchasing Bitcoins. Thus, if your CFDs’ price falls, you will get compensation for the occurred difference. Therefore, you do not have to face all the difficulties of buying and selling cryptocurrencies. For Bitcoin CFDs, you do not have to hand over real Bitcoins, which will save you from the custody fees.
- Futures Market
Futures markets are the contracts of the exchange-traded derivatives that lock in the handing over of a Bitcoin at a particular price in the future. Users who buy a futures contract will predict that an asset’s price will rise with a guarantee that the user can get a significant profit from it later. When selling a futures contract, it means that Bitcoin’s price is about to fall. Hence, users can short Bitcoins by buying the contracts that betted on the dropping of the price of Bitcoins.
- Inverse Exchange-Traded Products
They have a similar approach to that of the futures contracts as they create profits by blending them with the other derivatives. Popular exchange-traded products widely used are 21 Shares Short Bitcoin ETP and BetaPro Bitcoin Inverse ETF (BITI.TO). They can be used for gambling on the market drop of Bitcoins. Bitcoin gambling has become increasingly popular over the years due to the anonymity and security offered by cryptocurrencies. Many gambling sites now accept Bitcoin and other cryptocurrencies as payment. To find them, checkout Wetten ohne deutsche Lizenz – geht das? Blog. However, as with any form of gambling, there are risks involved, and it’s important to approach Bitcoin gambling responsibly.
- Margin Trading
Several exchanges and brokerages have authorized margin trading. They allow users to borrow a certain amount from the broker for carrying out a transaction. The margin will comprise the borrowed money or leverage. While it may enhance your profits sometimes, it may also worsen the losses at other times.
- Prediction Market
For shorting through this method, investors will have to organize an event and gamble depending on the result. For example, you can bet by predicting that the price of Bitcoin will drop by a certain percentage. If someone is ready to take the bet and your prediction becomes true, you can benefit from it.
- Short-Selling Bitcoin
This is a gambling method and individuals can benefit from it if their bet goes right. As the first step, you will have to sell all your crypto tokens at a decent price and wait for the price to fall before repurchasing them. This is a risky option because if your prediction goes wrong, you will lose all your money or crypto assets.