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Proven Ways to Short Sell Bitcoin

If you’re one of the many investors looking to invest in bitcoin, but feel like you may be too late to the party, consider short selling. When you borrow bitcoin from a broker (or exchange) and then sell it for a lower price, that is short selling. You then repurchase the bitcoin back and return the borrowed amount.

One of the newest investments in the cryptocurrency world is learning how to short sell bitcoin. It is a gamble, but it’s a low-risk investment that can pay off big if you’re able to predict the value of the coins on a future date. By betting on the price of bitcoin falling, you have the potential to make a profit if the price falls. Despite the recent decline in the value of bitcoin, selling bitcoin short is still a good strategy since it’s still possible to make a profit in the future.

What Is Shorting Bitcoin?

Shorting is a term that financial gurus use to describe selling an asset that you don’t have yet. When you buy an asset, you pay a large part of its price in the form of money. It is, however, yours to keep. But, when you short it, you borrow it for a set period of time. Then, you return it and “close” your short position. This is different from buying an asset because you trade money for the same, but it is similar to owning it because you have to pay to get it back.

It is usually done to make a profit. The profit comes when the value of the bitcoin rises, and you sell for a higher price than you bought it for.

Here Is the Guide on How to Sell Bitcoin

  1. Open an Online Trading Account. Short selling isn’t as complicated as you might think. One of the easiest ways to short sell Bitcoin, or any other cryptocurrency, is to open a Bitcoin trading account with an online broker. Like stocks, Bitcoin can be bought and sold in increments of $0.10, called contracts. The broker you choose to purchase these contracts from will determine how quickly you can sell your Bitcoin once you’ve received it. Open an account with one of these brokers.
  2. Undertake Analysis of the Bitcoin Market. Short-selling bitcoin is a proven way of making money, but it must be approached with caution. In the crypto world, this type of selling involves borrowing bitcoin from another investor, then selling it off before the price rises. The ability to do this is made possible by a recently passed tax law that allowed contracts to be settled in bitcoin. Before this law was passed, short selling was illegal in bitcoin. That is why bitcoin short sellers must be careful to comply with all trading rules, including knowing your customer (KYC) and anti-money laundering (AML) rules.
  3. Minimize your risk. Short sales were once only used by desperate homeowners who found it difficult to continue making their mortgage payments. However, as the housing market has collapsed over the past few years, banks have started to short sell more and more, often against the wishes of homeowners. This type of sale is when a lender sells the property for less than the amount the homeowner owes, allowing them to avoid having to take possession of the property. The good news is that there are lots of proven ways to short sell Bitcoin, which minimize your risk of losing your investment.
  4. Go short and ‘sell’ crypto. Bitcoin continues to gain popularity and acceptance every day, and it is a proven way to make money. While there are many cryptocurrency options you can try, bitcoin is still the most popular and common, which is why you should at least consider going short and selling bitcoin.

Bitcoin is a decentralized digital currency, meaning there is no central bank or governing body that issues it. Instead, it is issued and controlled by bitcoin miners, who create and validate new bitcoin transactions by placing their computing power to work. (The more computing power you devote to mining bitcoins, the more bitcoins you can earn.)

Short Selling Bitcoin Strategies

While digital currency is a relatively new concept, there has long been a fascination surrounding it. With the increased demand for bitcoin and the resulting increase in value, there has been an increase in interest in trading the currency. Essentially, the way this works is that traders will loan out bitcoin with the understanding that they will return it at a later date when the value of the currency has increased.