How Do You Short Bitcoin?
Shorting the currency is an option that might be beneficial for investors who expect the value of Bitcoin to drop at some time in the foreseeable future. Because of Bitcoin's growing visibility in traditional financial markets, there are now more places and methods than ever before to engage in the practice of shorting this cryptocurrency. The following is a list of several approaches that may be used to short Bitcoin.
1. Futures Market
A Bitcoin future is an agreement to buy Bitcoin at a certain price in the future. In a futures contract, you may be either the seller or the buyer. You, as the seller, sell a Bitcoin futures contract to another trader. That is, you promise to sell the holder of the Bitcoin future an agreed-upon amount of Bitcoin at an agreed-upon price when the Bitcoin future runs out.
If the market price of Bitcoin is lower than the agreed-upon price when the contract ends, you can make money by buying Bitcoin at a low market price and selling it to the future holder at a high agreed-upon price. You can find out more about bitcoin futures here.
2. Margin Trading
Short selling Bitcoin through margin trading entails borrowing Bitcoin against deposited collateral and subsequently selling that Bitcoin at market value. If the price of Bitcoin falls, you may buy it back at a lower price and return it to the lender. Profit is the difference between the selling and purchasing prices. If the price rises, you must pay the higher price, whatever it is, to repurchase the Bitcoin and return it to the loan.
3. Prediction Markets
Prediction markets are websites where consumers may place bets on certain occurrences. A prediction market is analogous to a sports betting enterprise.
In a crypto prediction market, you may bet on the price of Bitcoin decreasing or climbing to a certain level after a certain amount of time. If you win the bet, you will be paid by the trader you bet against. You must pay them otherwise.
4. Trading Binary Options
A Bitcoin put option allows you to sell Bitcoin at a predetermined price in the future. To set up a put, you must pay a one-time price (called the premium). When the put expires, you have the option to exercise it. If the market price is lower than the agreed price, you may benefit by purchasing Bitcoin and selling it to the pot holder.
5. Making Use of an Inverse Exchange-Traded Product
ETPs are derivatives that are tied to the price of a group of underlying assets. It is a typical derivative if the derivative is' 'long' of those assets (ETP).
An inverse ETP is similar, except it is short of a set of assets. When you buy a Bitcoin inverse ETP, you and other traders who also bought the inverse ETP share the gains from a short position in Bitcoin.
6. Bitcoin Asset Short-Selling
If you possess Bitcoin and believe the price will fall, you can sell it at the present price and then repurchase it at a lower price, generating a profit. Because Bitcoin is not "borrowed," you are never required to repurchase it in order to return it to a lender. There will be no margin payments. This means you can hold your short position for as long as you want for free. However, you must have sufficient funds to purchase and own Bitcoin.
7. Utilizing Bitcoin CFDs
Another sort of bet on the price change of an asset is a contract for difference (CFD). Rather than purchasing or selling, you agree to compare the market price of Bitcoin with the price in the CFD after a certain date.
If the price is greater, you pay the difference to the other individual. Alternatively, if the price is lower, the difference is paid by the other party to you.
For more information, just head to CryptoRunner.com.
***
DISCLAIMER
The views, opinions and positions expressed in this article are those of the author alone and do not necessarily represent those of https://www.cryptowisser.com/ or any company or individual affiliated with https://www.cryptowisser.com/. We do not guarantee the accuracy, completeness or validity of any statements made within this article. We accept no liability for any errors, omissions or representations. The copyright of this content belongs to the author. Any liability with regards to infringement of intellectual property rights also remains with them.