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How to short crypto and where to short crypto - a complete guide

Answering how can you short crypto and the what is the best exchange to short crypto for you

How to short crypto and where to short crypto

Written by

Alex Crypto
Published on

April 7, 2023

Cryptocurrency today can be found in almost every investment portfolio, so the question of how to short crypto is more than relevant. At first, it may seem that this is a rather complicated process, which requires specific experience and knowledge from the investor, but that's not the case at all. And you don’t even need to worry if can you short crypto, because, with simple preparation and basic knowledge, you will get the first results immediately. Also, read some facts below to find the short crypto meaning and some tips for a profitable start.

What does short crypto mean?

What does short crypto mean

So, short crypto is one of the most promising strategies in cryptocurrency investing in today's market. Its essence is that the trader sells crypto at the highest price, and after that - buys at the lowest rate. It is often referred to as a vanilla strategy because, for those who don’t know what does short mean in crypto, it seems very simple indeed, but in fact, it also involves certain risks.

But with the right approach, traders really can get some great results using a dipping market to their advantage, and 2022 was one of the best years for that strategy realization. The main reason for the high popularity of short trade crypto is that there is always volatility surrounding the crypto market.

Can you short crypto?

When you know about this strategy the next question to ask is can you short sell crypto. Interestingly, this concept has been used exclusively in the stock market. But due to the increased attractiveness of crypto for investments, as well as the presence of intense volatility with the potential for large gains or losses in a brief period on the crypto market, crypto short has become really in demand.

But for sure to find the best way to short crypto you will need to learn as much as possible about this strategy and work with a secure exchange.

An example of shorting

To better understand the features of the short position crypto, it is enough to consider an example of its application in practice. For example, you know what is a short position in crypto and borrow 1 BTC for $30,000 being sure that its value will start to decrease soon. After a while, the rate really starts to fall and you may buy 1 BTC for $20 000. That means that the margin of that transaction is $10 000 (don't forget to also take into consideration the platform's commission and margin percentage). In this case, the amount of Bitcoins you have remains the same as it was before the crypto short selling.

Risks behind shorting crypto

Risks behind shorting crypto

Before learning where to short crypto it's important to understand all its risks. Also, it's important to analyze the statistics of the selected cryptocurrency and be sure that there will be no unlimited downsides. Theoretically, many factors can cause a trader to lose all of their deposit or to have to pay 10 or 100 times more for borrowed BTC. But of course, with a stop loss and some other tools you can use with short selling crypto, you can make this risk minimal.

Market volatility and unpredictability

This is for sure one of the biggest risks in short sell crypto, and each trader can face it at any moment. But at the same time, the volatility is the basis of the strategy and that is the NO. 1 information to learn to understand can u short crypto. But only with the right approach and quality preparation volatility and unpredictability of the crypto market will help you to get a profit, avoiding the short squeeze crypto risk.

Liquidation risk

Quite a common situation among those short trading crypto traders who do not have enough information to make the right decision. Liquidation is possible when closing a trader's position due to the lack of sufficient margin to cover current losses. This means that the trader simply cannot cover the margin requirements with the selected leverage. That’s why it's important to learn how to short sell crypto and use effective strategies.

Crypto short squeeze

One more thing to learn before reading how can I short crypto is the short squeeze risks. The crypto short squeeze can happen when this crypto suddenly surges and traders who have used that strategy start to close their position.

How to short crypto?

How to short crypto

So now you know what is a short squeeze in crypto and about other common risks, and now you have some minimal base for your future decisions. On this page below you will find more information about how to short in crypto and the most popular ways to do that. Read them all to find where can you short crypto.

Margin

During the process of learning how do you short a crypto each trader heard about the margin interest that should be paid to a brokerage firm or an exchange when the BTC is borrowed. And in short in crypto, it should be paid hourly or daily (due to the terms of the exchange). And the margin interest will grow due to the period when the short position is open.

Futures

Another important technique for those trying to figure out if can I short crypto is the futures markets. This is the best choice for those who do not want to trade directly. Here, the trader needs to sign a contract demanding to buy or sell the asset at a price that has been predetermined in the given data. Also, short sale crypto fans can sell a futures contract, and sell the crypto when at a higher price (but not more than it was predefined in the contract). Some risks should be taken into account by everyone who tries to understand if can you short a crypto.

Options

For those who are searching for how can you short crypto options can be a thing mostly because you can sell the crypto at today’s price, even if soon the price will drop again. Experienced traders can get some great results with Binary options, but if you just figured out what is short selling crypto, then for you there will be too many risks. The main advantage here is that traders can easily limit their losses.

Leveraged tokens

This is another option for how to short trade crypto, mainly because it is similar to the fund that investors use to hold their money. This concept means that investors use a specific monetary product that will track all the movements of the price. The main goal here is to multiply the earnings of a person who knows what does it mean to short a crypto and is willing to use derivatives to do so. At the end of each day, this fund will be rebalanced to minimize the liquidation risks.

CFDs

CFD is a great financial strategy for those who are searching for information on how do I short crypto. It is similar to the BTC futures, but it’s more like the bets on the crypto when you try to predict the price of the selected currency. This contract will be settled in fiat, so the settlement tenure will be really flexible.

Prediction markets

The prediction market is one new concept if you only start to learn what is a short in crypto, but you need to know that meaning. Here investors will create the events, and other traders can predict if the crypto will be declined by a specified margin or percentage. You can select the best crypto to short and get the profit if other investors will take you up on your prediction. So now that you know how to short the crypto market you will need only to choose the best place (Augur or any other).

Where to short crypto?

Where to short crypto

Do you want to know where can i short crypto? There are so many available options for crypto traders that it will be so easy for you to find the best for you. For sure it's better to start with learning how to short a crypto, to make the right decision about the finest exchanges or platforms for you. But if you already know that, read the list of the best exchange to short crypto below.

Binance

This is one of the companies one thinks of first when looking for how to short cryptocurrency, mainly because it is the NO.1 crypto exchange not only in the US but all over the world. For sure there are so many great pros in this exchange that after you don’t need to think about where can I short crypto in us, such as:

  • Fees around 0.02% (maker) and 0.04% (taker)
  • Great selection of cryptocurrencies
  • 40 billion of daily volume
  • Up to 10x margin

This is one of the best exchanges to short crypto that is worth $300+ billion, and still growing.

Coinbase

If you are looking for where to short crypto in us the Coinbase will be the best choice and the only option for legal shorting via brokers. Here are some more pros of this best exchanges to short crypto:

  • User-friendly and secure platform
  • Over 120 cryptocurrencies
  • The best app to short crypto that is available for free
  • Fees only 0%-0.60%

As you can see this is truly the best platform to short crypto, but also the NO.1 exchange if you want to maximize your returns.

Bybit

Bybit is one more option for those who are interested in the crypto short interest, but it’s not the TOP exchange with the best terms. Here are the main features of this platform that can be useful for those who are looking for infiltration what is short trading crypto:

  • 100x leverage
  • It is worth $30+ billion
  • Fees 0.10%

So can u short crypto here? Sure. But to get the maximum from that it's better to find another platform, especially since this one is focused on futures and derivatives markets.

Kraken

So is there a way to short crypto on another platform? Sure, you can use Kraken to achieve all your goals. And if you understand what is crypto short for you will get some results, using the next pros of the Kraken:

  • Centralized exchange
  • Wide range of cryptocurrencies
  • Fees 16%-0.26%

And there is no doubt if can you short crypto? But you can find better terms than in this platform with a worth of $15 billion.

How to choose the best exchange to short crypto

You no longer doubt if is it possible to short crypto, because on this page there are lots of facts that prove that each person can do that easily. But for sure you will need some time to find the best platform to short crypto and get the real profit there. And to make this process easier, first, learn what is short in crypto, and then familiarise yourself with the terms and commissions on various exchanges, insurance rules, security, and collection of digital currency.


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