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Wondering where to short crypto in 2020? Look no further than our list of the top 10 coins to short this year!
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Introduction
In order to short crypto, you need to have a platform that allows you to do so. There are a few different exchanges that allow you to short cryptocurrency, but the most popular one is BitMEX. Other platforms include Kraken, Bitfinex, and Binance.
What is cryptocurrency?
Cryptocurrency is a digital or virtual currency that uses cryptography for security. A cryptocurrency is difficult to counterfeit because of this security feature. A defining feature of a cryptocurrency, and arguably its biggest allure, is its organic nature; it is not issued by any central authority, rendering it theoretically immune to government interference or manipulation.
Cryptocurrencies are decentralized, meaning they are not subject to government or financial institution control. Bitcoin, the first and most well-known cryptocurrency, was created in 2009 by an anonymous person or group known as Satoshi Nakamoto. Cryptocurrencies are often traded on decentralized exchanges and can also be used to purchase goods and services.
What is a short?
In the financial world, a short is when you bet that a stock will go down. If the stock price does go down, you make money. If the stock price goes up, you lose money.
To short a stock, you borrow shares from somebody else, sell those shares, and hope to buy them back at a lower price so you can give the shares back to the person you borrowed them from and keep the difference as profit.
In the cryptocurrency world, things work a little differently. Instead of borrowing shares from somebody else, you borrow cryptocurrency from somebody else and then sell it immediately. Again, your hope is that the price of the cryptocurrency will go down so that when you buy it back, you can give it back to the person you borrowed it from and keep the difference as profit.
How to short cryptocurrency
Shorting cryptocurrency is a way to bet against the price of a digital asset, hoping that it will go down in value. It can be a risky investment, but it can also be a way to make money if the price of crypto goes down.
In order to short crypto, you will need to find a way to borrow the digital asset you hope to sell. This can be done through a variety of exchanges and platforms that offer crypto-backed loans. Once you have borrowed the asset, you will then sell it on the open market, hoping to buy it back at a lower price so you can return it to the lender and pocket the difference.
Of course, if the price of crypto goes up instead of down, you will end up losing money on your short. This is why shorting crypto is considered a risky investment. However, if you do your research and pick your moments carefully, it can be a way to make money in the volatile world of cryptocurrency.
exchanges that allow shorting
There are a few exchanges that allow shorting of crypto assets. These exchanges include Bitfinex, Kraken, and Poloniex. While there are other exchanges that offer this service, these three have the most volume and liquidity.
Bitfinex is a digital asset trading platform offering spot trading services for major digital assets and fiat currencies. The platform also offers margin trading with up to 3.3x leverage and provides OTC services for large trades.
Kraken is a US-based cryptocurrency exchange offering multiple fiat-to-crypto and crypto-to-crypto pairs 20 different cryptocurrencies. The exchange also offers margin trading with up to 5x leverage on certain pairs as well as OTC services for high volume trades.
Poloniex is a US-based digital asset exchange offering over 100 Bitcoin pairs and altcoins for margin trading with up to 2.5x leverage. The exchange has been around since 2014 and is one of the most popular altcoin exchanges.
Risks of shorting cryptocurrency
Shorting cryptocurrency is a risky proposition, and there are a few things you should be aware of before considering it. First and foremost, crypto is a highly volatile asset class, which means that prices can move dramatically in either direction in a short period of time. This makes it tough to predict where the market will be even a few hours from now, let alone a few days or weeks.
Second, there is the risk of getting caught in a so-called “short squeeze.” This happens when the price of an asset starts to rise rapidly and unexpectedly, causing traders who are short the asset to buy it back to cover their positions. This can create a self-fulfilling prophecy and cause the price to rise even higher.
Finally, there is always the risk that the exchange or platform you are using to short crypto will suffer from hacks or other technical problems. This could result in you losing your position or being unable to close it out at the price you want.
All of these risks should be considered before shorting cryptocurrency. If you do decide to go ahead with it, make sure you use stop-loss orders and take other measures to protect yourself from potential losses.
Conclusion
While many people think that crypto is all about the upside, there is also a lot of money to be made in shorting crypto. However, it’s not for everyone and it’s important to understand the risks involved before getting started.
Shorting crypto is a way to make money when the price of cryptocurrency falls. It’s a risky strategy and should only be used by experienced traders.
There are a few different ways to short crypto. The most common is to use a futures contract or margin trading. You can also use derivatives or CFDs to short crypto.
The best way to short crypto will depend on your trading style and risk tolerance. Whichever method you choose, make sure you do your research and understand the risks before getting started.
