How to Short Bitcoin and Bitcoin Future: Real-life Strategies
How to short bitcoin, Future of bitcoin and how to earn from it. Relevant options for 2020 and 3 easy steps to bitcoin shorting
How to short Bitcoin in 2020 is a hot topic, the same as it was in 2019! We’ll talk today about all the different ways to short Bitcoin in 2020, as well as the easy ways in which you can short Bitcoin
Step by Step
- Choose a method: Are you going to use traditional short selling, or derivatives market trading?
- Manage that risk: Many factors affect the currency rate. Make sure you’ve got an eye on it and your chosen strategy can manage it.
- Open your position: Once you’ve chosen your method and strategy, open your position and monitor and control the results.
What is bitcoin shorting?
Bitcoin shorting is like traditional stock short selling, which basically bets against the price of the asset, in this case, the coin. When you short something, you want the value to go down, that’s how you capture money. The person you’re betting against expects to be paid back in the asset, not currency.
How does it work?
You borrow the coins and immediately sell them. You have to return the coins, not the cash. Now, you’re waiting to buy the coins at the lowest possible price before you return them. The gap between what you sold the coin for and what you buy it back for is your profit.
Let’s say you short 100 BTC at $7,000 a coin. You immediately sell the coins on the market and make $700,000. You 1 month to pay back the 100 BTC. During the month, the BTC price falls to $6,000. You buy $600,000 worth of BTC, and payback 100 BTC to your counterparty. That means you make $100,000 by shorting bitcoin!
Shorting bitcoin. Methods
You can buy bitcoin options for Bitlevex. You can purchase the options contracts that allow you to trade BTC at a specific price by a certain date. Just be careful, as the contracts come with an expiry date. If you expect the price of BTC to go up or down, you can profit from these types of trades by guessing correctly the direction of the price.
Bitcoin CDF: Contract for Difference
Another instrument you might consider is a CDF, or contract for difference. With these types of contracts, you just pay the difference, and if the prices go down, you’ll be owed the drop. The advantage is that you don’t have to repay the actual coin, and it requires less capital to speculate in these types of contracts.
Bitcoin futures: CME/CBOE
A futures contract allows you to buy an asset for a price in the future. Some companies use this type of instrument in order to bring some stability to costs when they purchase large amounts of a commodity over time, like oil.
If you expect that the price will skyrocket, you can use this type of contract to continue to purchase Bitcoin at a lower price over time. Of course, you’ll have to pay a premium in order to get the contract settled, but your bet is that the premium is less than the future gains. Of course, you don’t have to purchase anything, so if the price falls, you’re just out the premium.
Is it possible to earn from Bitcoin Shorting as much as from going long on Bitcoin? How much can I earn?
Absolutely. Because the price of BTC is volatile, even if you expect it to grow over time, you can take advantage of the pits and valleys along the way. That’s what the best technical traders are doing already. Congratulations, you’ve now got the knowledge to join them!
Remember that even smaller swings can earn money, for example, a 5% decrease on an investment of $1000 will be $50.
Want to get started earning? Just choose your option!
Good luck and happy trading!