Shorting Bitcoin (BTCUSD) may be a suitable strategy for investors who anticipate that the cryptocurrency’s price will fall short. With Bitcoin’s growing prominence in mainstream banking, the number of venues and methods for shorting the cryptocurrency has increased. If you want to short Bitcoin, here are a few methods. For more detailed and accurate information, visit blockchain investors.
Trading on Margin
As a result of margin trading and the ability to “borrow” purchase securities, many exchanges or brokerages offer this sort of trading. Remember that borrowed money or leverage can either boost earnings or worsen losses when it comes to margin. Margin trading is available on several Bitcoin exchanges right now, including Kraken and Binance.
A Market for Speculative Contracts for Difference
There is a Bitcoin futures market, just like there is one for other assets. A futures transaction involves a buyer agreeing to acquire an asset in exchange for a contract. Futures contracts let you bet on the price of an asset rising, so you know you’ll be getting a good deal upon this later on. By selling a futures contract, you are indicating that you have a negative outlook and believe that the price of Bitcoin will fall.
You may bet on a discounted cost for Bitcoin by buying contracts that bet on either a lower Bitcoin price. The trading of Bitcoin futures took off as the price of cryptocurrencies grew at the end of last year. The world’s largest derivatives market, the Exchange (CME), and cryptocurrency exchanges allow you to short Bitcoin futures.
Options Trading in Binary
The use of call & put options allows investors to short Bitcoin. Call and Put Options. You would use an escrow provider to execute a put order if you wanted to short the currency. This process indicates that you like selling its currency at its current value, even if the value decreases in the future. There are several offshore exchanges where you may find binary options, but they come at a premium price (and with significant dangers).
You may limit your costs by not selling your put options while trading binary options instead of futures. In other words, you may only lose up to the cost of the put options that you purchased. When it comes to trading options, Deribit and OKEx are well-liked options exchanges.
Futures and Options Trading
Another option for shorting Bitcoin is to use prediction markets. The crypto-prediction markets resemble traditional markets in this regard. Investors can use the result of an event to place a wager. It’s possible to forecast that Bitcoin’s value would fall by some amount, and if anybody bet on it, it will pay out if your prediction is correct. Augur, Transcendence’ Omen, and Polymarket are a few well-known crypto-prediction markets.
Bitcoin Asset Short-Selling
Investors willing to put their money where their mouth is and take a risk on a technique that may or may not work will stand to win if their wager against Bitcoin price is successful. Please wait for the price to decline before repurchasing your tokens, then sell them off at a profit. Naturally, if the price doesn’t entirely move as expected, you may lose money or your Bitcoin assets as a result. The costs and dangers of shorting Bitcoin are also substantial.
Cryptocurrency wallet costs, for example, must be paid to keep the cryptocurrency until we trade it. Adding Bitcoin to your portfolio will expose you to the volatility of the currency’s price. You may lose a lot of money is if the price goes upwards, as you’d intended. Leverage is available on some exchanges for making these kinds of deals.
Using Bitcoin Futures and Options
With a contract of differences (CFD), investors can profit from the price difference between a financial instrument’s beginning and closing prices. As with Bitcoin futures, the price of a Bitcoin CFD determines whether it is a good investment or a bad one. You are short-selling Bitcoin if you buy a CFD expecting a decrease in its price. CFDs provide a more flexible settlement period than Bitcoin futures, which already have preset settlement dates.
Because Bitcoin CFDs don’t require the actual bitcoin to be delivered, they are also known as Bitcoin Options. As a result, you’ll save money on custody fees. Traders can engage in a contract based on the performance of Bitcoin or the performance of Bitcoin about fiat money or another crypto in some Bitcoin CFD marketplaces.