5 Ways to Short Crypto

19 Jun 2022

As the value of digital assets such as bitcoin falls, shorting cryptocurrencies is gaining popularity. 

Speculators are placing wagers against volatile currencies such as Bitcoin BTC when the price of a single coin reaches $20k.

Previously, some investors saw cryptocurrencies as a good inflation hedge, but the market has recently sustained significant losses.

According to market capitalization, the value of the number of the most well-known cryptocurrencies has decreased by more than fifty percent this year.

Cryptocurrency betting is a fresh concept that has only lately gained widespread acceptance. 

Shorting cryptocurrencies is more difficult than shorting stocks, which investors can easily sell on the open market and then repurchase when the stock price declines.

Shorting cryptocurrencies is not a straightforward operation, but there are ways for investors to profit from the decline of the bitcoin market.

Ways to Short Crypto No. 1: Margin Trading

One of the easiest methods to short Bitcoin and other cryptocurrencies is margin trading. 

This will likely continue. 

To take net short positions on particular cryptocurrencies, several of the most popular cryptocurrency trading platforms and brokerages allow users to borrow cash from others.

You can utilize Binance or Kraken to complete this transaction.

Ways to Short Crypto No. 2: Futures Markets

To profit from the current bear market in cryptocurrencies, you can use futures markets to short crypto. 

Purchase Bitcoin contracts with a future expiry date, and you can profit from anticipated price drops. 

On the Chicago Mercantile Exchange, a limited number of cryptocurrency futures contracts can be traded.

Ways to Short Crypto No. 3: Prediction Markets

Using prediction markets, one can easily wager against cryptocurrencies.

Using prediction markets like Augur and Polymarket, customers can speculate on the value of a coin declining by a set percentage. 

You can win money if your bet is accepted and you accurately forecast the outcome.

Ways to Short Crypto No. 4: Inverse Exchange-Traded Funds

One can utilize inverse exchange-traded funds to wager on the depreciation of a certain investment. 

ETFs such as the BetaPro Bitcoin Inverse ETF in Canada are unavailable in the United States. 

Some investors use the ProShares Bitcoin Strategy ETF BITO, which provides exposure to bitcoin futures contracts, to generate short positions in exchange-traded funds (ETFs).

Ways to Short Crypto No. 5: Buying Short Tokens

Buying short tokens is the fifth strategy investors have discovered to profit from shorting digital assets. 

If the price of Bitcoin decreases, the price of a short Bitcoin token will increase. 

This is because short Bitcoin tokens are scarce. 

The 3X Short Bitcoin Token BEAR is an illustration of this. The BEAR cryptocurrency should increase by 3% for every 1% Bitcoin value decline.

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It's actually a legit and a genuine way to short for a coin or a token
Good info shared by you
Great to learn about the different ways of shorting crypto, I knew about just the future and the short tokens, but I never really know about the others. But futures still remain my favourite meas of shorting the crypto market because of the leverage involved