borrow Bitcoin or other coins from a broker, which you can then trade with and repay later. Direct Short Selling Direct short selling doesnt involve any borrowing or contracts at all. #1 To do this, youll need to open an account with a cryptocurrency exchange platform like Coinbase or eToro. More to the point, anyone with any investment experience could tell those prices had to come down before they could start a more sustainable rise. A long/short investment strategy is usually associated with hedge funds, but a growing number of cryptocurrency owners are using the same approach to diversify their portfolio and increase their profits. Many only allow you to buy through contracts for difference (CFDs) which means you wont actually own the coins you buy.
Bitcoin futures short or long
You borrow and sell coins at 12k a piece and then pay back your lender when the market price is lower for example, 9k, which would result in a 3,000 mark up on each coin. This is important when you have to react quickly, as tends to be the case with short selling. Now, lets look at how you can long/short cryptocurrencies.
You could have sold those coins for 19k at the time and then paid back your lender roughly 6k per coin when prices were at their lowest in February 2018 making a tidy 13,000 profit on every coin. In the case of a short position, youre essentially borrowing an asset with the expectation that its value will decline. Why Should I Long/Short Cryptocurrencies? At the opposite end of the spectrum, buying in February, when prices dropped below 6,000, was the best time to invest in Bitcoin this year and this shows how critical timing can be over the space of just two months. This allows you to simulate short selling by betting on price drops and the key benefit is you dont have to worry about actually buying or selling anything.