Short Bitcoin

How to short Bitcoin on Binance and BitMEX? What is Short Selling?

Are you seeking out answers on how to short Bitcoin on Binance and BitMEX? If you are a beginner that wishes to get into crypto trading, then this guide is for you. We go into great detail about what shorting Bitcoin really is, how to do it, and what types of contracts are available to you right now. The guide explains what is Bitcoin short interest and short squeeze, as well as whether you can short futures.

However, the biggest contributions of this article are step-by-step guides on how to short Bitcoin on Binance and BitMEX. Keep reading to get the latest info on these two platforms and know-how to easily earn quick profits.

Property Binance BitMEX
Regions
Global (U.S. excluded)
Global (U.S. excluded)
Trade Fees
0.012% - 0.10%
(-0.05%) - 0.25%
Bitcoin Pairs
Over 100 of them
USD only
Futures Contracts
Yes
Yes
Verification
Optional
No
Deposit Fees
Free
Free
Fiat Trading
Yes
No
Altcoins
Over 100
ETH, ADA, EOS, and 4 more
Start Trading

What is Shorting Bitcoin?

Are you seeking out answers on how to short Bitcoin on Binance and BitMEX? If you are a beginner that wishes to get into crypto trading, then this guide is for you. We go into great detail about what shorting Bitcoin really is, how to do it, and what types of contracts are available to you right now. The guide explains what is Bitcoin short interest and short squeeze, as well as whether you can short futures.

However, the biggest contributions of this article are step-by-step guides on how to short Bitcoin on Binance and BitMEX. Keep reading to get latest info on these two platforms and know-how to easily earn quick profits. For full platform reviews, check Binance review or BitMEX review.

Can I Earn Good Profits from Shorting Bitcoin?

Now that you know what shorting is, is there a way to earn good profits from shorting bitcoin? What about when price fluctuations are quite small? There is a function called leverage that allows you to borrow funds from the platform.

It powers up your order without investing more than what is in your balance. You earn more exponentially depending on how much assets you wish to leverage. However, keep in mind that losses are equally bigger if your market analyses misfire.

How to Short Bitcoin on Binance?

Now we get to the juicy part – we will show you how to short Bitcoin on Binance and earn profits. Here are steps you need to take to make it happen:

Step 1: Create an account. Easy enough and takes about 10 minutes total to do. Provide your email and password and put on two-factor authentication (2FA).

Step 2: Analyze the market through charts and indicators. For crypto beginners, we recommend the “Basic Exchange” window, as it is easier to navigate through. Binance charts offer tools that can help you determine price trends. As seen from snapshot below, you have abundance of indicators to choose from if you open up TradingView option (indicated by green square).

How to short Bitcoin on Binance and BitMEX abundance of indicators on trading view

Moving average (MA) would open up automatically, an indicator that everyone, crypto beginners included, should use. As for the price, you are looking for a downturn trend, when the price is about to go down. The price decline is shown through red bars. We recommend looking into past week to locate price drops to predict when would be the next big drop.

Step 3: Create a Short Order. Now, choose a BTC pair and create an order. You do so by first checking out the right-hand side of the window, as indicated by the green square in the picture below.

How to create a short order with Binance

Once you a pair down, you proceed by filling out an order. This is located in the middle of the page, as seen from our snapshot below. Note that in our example, we are using exchange form, where you fill out how big the order and release it to the market. You click “Sell BTC” and continue to the other step.

How to create a short order with Binance sell BTC

 

However, if you want to use leverage function (up to 20x) “Futures” would be the option for you. However, using the leverage rate is quite risky, as you can lose as much as you can gain by borrowing additional funds from other participants.

Step 4: Watch Market Behavior. Since we are shorting Bitcoin, price growths would mean a loss for you. Thus, keep an eye on the market and how it behaves. We would recommend setting a stop-loss function to either limit your losses if bull run occurs or to close the position if price falls down sufficiently enough. In any case, your active participation and vigilance is of utmost importance.

Step 5: Close the Order. Once you see BTC price dropped hard enough compared to a paired coin, you click “Close order” to get it out of the market. You do so by clicking “Close Order” that is located in the space shown below.

How to create a short order with Binance close order

Take into account Binance fees if you are not using BNB (Binance coins) as they take away a portion of your profits. They range from 0.012% to 0.10%, depending on volume of the order and the verification tier you have achieved.

Step 6: Do it all over again.

How to Short Bitcoin on BitMEX?

Apart from Binance, you can also short Bitcoin on BitMEX as well. The platform is crypto-to-crypto trade only but has many advantages of its own. Here are steps you should take to start shorting Bitcoin on BitMEX.

Step 1: Register an account. It is quite easy and lasts about 5 minutes. It requires an email address and password. Be sure to implement 2FA with Google authenticator.

Step 2: Analyze the market first. With that out of the way, it is time to set up your analysis straight. On the right side of the screen, there is a BitMEX chart that can be of great help. As indicated in screenshot below, you can enlarge the chart (green square) and put in indicators (yellow square) to help you determine the trend.

How to create a short order with BitMEX analyze the market

As seen in the below chart, there are many indicators to choose from. For beginners, we suggest Moving Average” as it indicates where general price trend is heading to. You are looking a generalized downturn or when price reaches a peak and is about to fall down.

How to create a short order with BitMEX moving average indicator

Step 3: Create a Short Order. Once you have nailed down the time you want to start shorting Bitcoin, you can open up an order. At BitMEX, it is located on the left-hand side, as indicated on the snapshot below.

How to create a short order with BitMEX create a short order

You start by putting the number of bitcoins you wish to short and at what value (yellow circle). Quantity the volume you wish to trade with. Green square will show you the fee structure. Costs vary from -0.05% (reimbursements) to 0.25%, depending on market conditions. Take these into account when calculating your planned profits and the price level you wish to close the contract.

Lastly, you simply click the “Sell / Short” button and voila! Your order is live.

Step 3a (Optional): Use Leverage. If you wish to earn more from Bitcoin shorting, you can use leverage rates, indicated with a red square. Please note that BitMEX allows 100x rate as maximum amount for leverage. The maximum level is quite powerful and as such, sets liquidation price quite close to your starting value.

It means that should BTC price go up instead of down in value and surpass the liquidation threshold, your order would close and wipe out your balance. Starting with a 10x or smaller rate would be the best for beginners.

Step 4: Watch until BTC Price reaches the desired value. This step is perhaps the most agonizing one, as you sit and wait until price reaches the level you have set. We recommend putting a stop function that would close the order automatically.

You can put stop-order either to limit losses or to close the order once BTC value reached desired level. It would close the order for you, so you can be free from constantly looking at charts.

Step 5: Final step – Close the Order and Analyze. Once the ROE is at the acceptable level, it is time to close the order and earn profits. You do so by clicking the “Close Order” button that would be located in the space indicated by a yellow square in snapshot below.

How to create a short order with BitMEX close order and analyze

We highly recommend analyzing the period within which your order was live. It will help you understand what drives the market and at what times should you open a new short order.

Step 6: Rinse and Repeat.

What is Bitcoin Short Interest?

As you go by crypto trading, few terms like Bitcoin short interest are important to understand. Short interest is the number of short orders released to the market. It helps you determine how many people are shorting Bitcoin. If a lot of traders do it, there is a good chance that BCT price will go down fairly soon.

In the case of Binance, you can check them out on the left side of the trade window, indicated by the green square.

What is short interest with Binance

BitMEX also provides data on the latest short trades. You can check them out in the snapshot below, indicated by the red font.

What is short interest with BitMEX

What is a Bitcoin Short Squeeze?

Bitcoin short squeeze is a situation in which BTC price starts to go up drastically. It is a time when short orders incur losses and traders are trying to close their positions. In most cases, you will be forced to incur a loss, since these jumps are rarely stable. To hedge against such price movements, always leave stop-loss function, indicating the price level at which you will incur an acceptable loss.

Can You Short Bitcoin Futures?

It is quite possible to short Bitcoin futures at both Binance and BitMEX. Bitcoin futures are contracts at which you indicate the future price of the coin at a specific time. You do so by putting a future price (that you got from thorough analysis) while creating an order. Then, you put stop function and wait until a specific amount of time passes by.

However, you should account for the risk that price may not move in the direction you want. If that happens, you incur losses.

What are the Risks with Shorting Bitcoin?

As a conclusion, we do need to stress that risks with shorting Bitcoin should not be ignored. You are betting that BTC’s price will drop in the future. However, trends may not go as planned for various reasons. Here are risks you should look after while shorting Bitcoin:

  • Bitcoin price growth forces losses on your account
  • Sharp price spikes can trigger liquidation function
  • If the price is stable, rollover fees can kill your profitability rate
  • Using high leverage rate means liquidation price rate would be too close to the price you have begun with

Your capital is always at risk when trading

Read more about our platforms in our reviews, such as our Binance review, BitMEX review eToro review.

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