How to Short Bitcoin
In this article we will go through how you can short bitcoin. There are many concepts out there: “short bitcoin”, “short sell bitcoin”, “shorting” or “go bitcoin short” – they all mean the same thing. We will explain what it means to go short, which trading platforms offer Bitcoin shorting and what risks come with shorting. We will cover the following topics:
• What is shorting Bitcoin?
• How to Short Bitcoin?
• Where to short Bitcoin?
• Where to short Bitcoin in US?
• Who lends Bitcoin to be sold?
• Other Cryptocurrencies to short
• Can you short Bitcoin on Binance?
• How to short Bitcoin on BitMEX
• Can you short Bitcoin on GDAX?
• How to short Bitcoin on Coinbase or Coinbase Pro?
• Where can I short Bitcoin with high leverage?
• Conclusion – How to short Bitcoin?
What is Shorting Bitcoin?
Shorting Bitcoin refers to the transaction used by a trader to profit from the decline in price of a borrowed Bitcoin.
Bob is shorting 1 Bitcoin.
1. Bob borrows 1 Bitcoin from Alice
2. Bob sells 1 BTC for $10.000
3. Meanwhile, the BTCUSD price drops to $5.000
4. Bob buys 1 BTC for $5.000 and gives it back to Alice
Bob makes a profit – for himself, at least – of $5.000 by shorting the borrowed Bitcoin.
How to short Bitcoin?
There are several crypto trading platforms that offer you ways to short Bitcoin. The above described procedure is automatic and in practice it´s as easy as buying Bitcoin normally. Check out our platform recommendations below.
Where to short Bitcoin?
You can short Bitcoin on all platforms that offer margin trading. Examples are BitMEX, PrimeXBT and Delta Exchange. These three Bitcoin futures trading platforms allow for leverage up to 100x. Also, CFD trading platforms lite eToro, Avatrade, Markets and Plus 500 allow you to short Bitcoin on their platforms with a leverage of up to 1:2.
Where to short Bitcoin in the US?
There are many crypto trading platforms that can’t allow US traders due to legal restrictions from the USA. These platforms are, among others, BitMEX, PrimeXBT and Delta Exchange. Kraken does allow you to short Bitcoin as a US citizen.
Who lends Bitcoin to be sold?
Short selling is only possible when there are Bitcoin holders who are willing to lend the Bitcoins they own. The reason a Bitcoin holder want to do this is that they can charge a fee for lending them. This will give the Bitcoin holder additional income on their investments. In addition, lending or short selling allows for a more liquid market.
Other Cryptocurrencies to short
Avatrade Crypto: Bitcoin, Ether, Ripple, Dash, Litecoin
Plus500 Crypto: Bitcoin, Bitcoin Cash, Ethereum, Monero, Litecoin, Ripple, Dash and NEM.
Etoro Crypto: Bitcoin, Ether, Ripple, Dash, Litecoin, Ether classic
InstaForex Crypto: Bitcoin, Litecoin, Ripple
SimpleFX Crypto: Bitcoin, Dash, Ethereum, Litecoin, BitcoinCash
Can you short Bitcoin on Binance?
No, you can´t short Bitcoin or do short selling on Binance trading platform.
How to short Bitcoin on BitMEX?
Shorting Bitcoin on BitMEX is an easily made in three steps.
1. Click on “Trade” for trading screen.
2. Click on “Bitcoin” to select Bitcoin as cryptocurrency to trade.
3. Click “Sell/Short” to do a short selling. Buy/Long is the opposite.
Can you short Bitcoin on GDAX?
GDAX doesn’t exist anymore. Coinbase crypto exchange replaced their trading platform, GDAX, with Coinbase Pro. See next question.
How to short Bitcoin on Coinbase or Coinbase Pro?
Coinbase exchange doesn’t allow you to short Bitcoin. Coinbase Pro didn’t introduce this trading feature yet either.
Where can I short Bitcoin with high leverage?
BitMEX, PrimeXBT and Delta Exchange are platforms that offer shorting Bitcoin with high leverage. Of course, you need to read the paragraph about risks associated with shorting an asset below.
Risks with shorting Bitcoin
Short selling an asset is different from buying or going long on an asset. When you buy an asset you only risk what you have invested (if you trade with no margin) since the price can’t be negative. However, when you short Bitcoin you speculate in a decline in the price and the limit is zero for all assets. But the opposite direction, if the asset increase in price, is limitless.
Conclusion: How to short Bitcoin?
First of all, you must understand the risks associated with short selling an asset before you even think of doing it. Secondly, you must understand what trading instrument you do trade with since there might be different rules and protections on different platforms.
After you understand the rules and the risks you can go ahead and short Bitcoin on BitMEX, Bitfinex, PrimeXBT and Delta Exchange.
Also, you might want to check the CFD trading platforms such as eToro, Avatrade or Markets to short Bitcoin. They offer leverage up to 1:2.