With Bitcoin undergoing a correction of more than 20% today, the biggest daily drop since the March crash, Bitcoin pessimists have once again chanted the cryptocurrency's defeat. However, there is a way to make money from the fall of Bitcoin.
As the market matured, Bitcoin soon gained ground in the derivatives sector and today it is possible to short BTC. The option is extremely risky considering the strong bullish moves that cryptocurrencies are well known for, but the corrections also represent opportunities for those who believe bearish.
Short trade in Bitcoin
Unlike Long "long", which means betting on the maximum of an asset, Short "short" is just trying to make money from the minimum. Trading requires someone to lend bitcoins, and some exchanges like Deribit, Bitmex, and Bitfinex offer this possibility. When you borrow the assets that the trader believes in devaluation, he sells and seeks to buy back at a lower price, then returns the assets and keeps the difference.
See in a few steps how the operation works to take advantage of the fall.
- Asset loan
- Sale at market price
- Buy it when the price drops
- Pay the interest on the loan
An extremely risky operation, especially when we talk about probably the most revolutionary asset of recent years, Bitcoin. The cryptocurrency continues to prove its worth over time, but continues to rack up criticism. Will they be brave enough to really go low?