Bitcoin short selling: full analysis of principles and practices

As an emerging digital asset, Bitcoin has attracted the attention of countless investors since its inception. Its price volatility is extremely high, which brings huge profit opportunities to investors, but also comes with corresponding risks. Among many investment strategies, short selling Bitcoin has become a hot topic. Many people are asking: "Can Bitcoin be shorted?" The answer is yes. To understand the principles and methods of Bitcoin short selling, we need to analyze from multiple angles.

The principle of Bitcoin short selling, in simple terms, is to make a profit when the price falls. Unlike the traditional buy-and-hold strategy, short selling is a reverse operation. When investors predict that the price of Bitcoin will fall, they can borrow Bitcoin to sell it, and then buy back the Bitcoin and return it after the price falls, thereby making a profit. This process involves multiple aspects such as borrowing, trading, and market psychology.

First of all, there are two main ways to short Bitcoin: contract trading through exchanges and leveraged trading. Contract trading refers to investors signing a contract with an exchange to agree to buy or sell Bitcoin at a specific price at a certain time in the future. The advantage of this method is that investors do not need to actually hold Bitcoin, but only need to operate according to market price fluctuations. The exchange will settle according to the rise and fall of the contract, thereby realizing profit or loss.

On the other hand, leveraged trading is to amplify investors' funds through borrowing. In leveraged trading, investors can control larger Bitcoin assets with less of their own funds. For example, if an exchange offers 10x leverage, investors only need to use $1,000 of their own funds to control $10,000 worth of Bitcoin. Although this method can bring rich returns when making profits, it will also increase risks when losing money.

When it comes to the risks of shorting Bitcoin, we must first understand the unpredictability of the market. The price of Bitcoin is affected by many factors, including market supply and demand, policies and regulations, and technological development. Therefore, investors must have sufficient judgment and analysis of the market when shorting. In addition, shorting may also face the risk of "forced liquidation", that is, when the market price fluctuates in the opposite direction, investors may be forced to close their positions, resulting in greater losses.

For novice investors, shorting Bitcoin is not an easy task. First of all, it is very important to understand the fundamentals and technical aspects of the market. Fundamental analysis includes analysis of the supply and demand relationship, market sentiment and macroeconomic environment of Bitcoin, while technical analysis requires mastering skills such as chart analysis and technical indicators. Only when you fully understand the market can you make more accurate judgments.

In the process of learning to short Bitcoin, investors also need to pay attention to some actual cases. For example, at the end of 2017, the price of Bitcoin soared to nearly $20,000 and then entered a stage of rapid decline. In this process, many investors chose to short and successfully made profits. However, some investors also suffered huge losses when shorting because they did not stop losses in time, resulting in increased losses. This tells us that shorting requires not only the ability to judge the market, but also a good sense of risk control.

In addition, psychological factors also play an important role in the shorting process. Fluctuations in market sentiment often affect investors' decisions. In a bull market, investors tend to be overly optimistic about the market, and in a bear market, they are prone to panic. This emotional fluctuation may cause investors to make wrong judgments when shorting. Therefore, keeping a cool head and rational analytical ability are important conditions for successful shorting.

In addition to the above risks, investors should also pay attention to the choice of trading platform when shorting Bitcoin. Different trading platforms differ in terms of handling fees, leverage ratios, liquidity, etc. Choosing a suitable trading platform can not only reduce transaction costs, but also improve the security of transactions. Therefore, it is very necessary to spend time studying the various indicators of the trading platform before shorting.

In general, shorting Bitcoin is a challenging and potential investment strategy. It requires not only investors to have solid market analysis capabilities, but also good psychological quality and risk control awareness. In this ever-changing market, only by continuous learning and continuous adaptation can we be invincible in shorting.

For those investors who have already developed a strong interest in shorting Bitcoin, they can consider starting with a small amount of funds and gradually accumulate experience. Practicing through a simulated trading platform and becoming familiar with the process and techniques of shorting can effectively reduce the risks in actual operations. In addition, regularly paying attention to industry news and market trends and understanding the latest developments in Bitcoin can help improve investors' judgment.

When shorting Bitcoin, investors can also use some technical tools to assist decision-making. For example, using trend lines and support levels to analyze Bitcoin's price trends can help investors find the right time to short. At the same time, with the help of some technical indicators, such as the relative strength index (RSI) and the moving average (MA), we can better grasp the market sentiment and avoid blindly following the trend.

Finally, shorting Bitcoin is not only an investment strategy, but also a way of risk management. By shorting, investors can protect their assets and even make profits when the market falls. This flexible investment strategy makes the Bitcoin market full of infinite possibilities.

Whether it is a novice or a veteran, understanding the principles and methods of shorting Bitcoin and mastering the corresponding skills are the keys to success in this rapidly developing market. As the Bitcoin market matures, shorting strategies will become more and more popular with investors. In the future, whoever can seize the opportunity to short in this market full of opportunities and challenges will be able to stand at the forefront of the wave of Bitcoin investment.

The four most famous international exchanges:

Binance INTL	OKX INTL	Gate.io INTL	Huobi INTL
China Line　APP DL	China Line　APP DL	China Line　APP DL	China Line　APP DL

Note: The above exchange logo is the official website registration link, and the text is the APP download link.

Can Bitcoin be shorted? Bitcoin shorting principles and methods, Bitcoin can be shorted, Bitcoin now has a futures market and the futures market is divided into long and short camps, the air force is dedicated to shorting, the game between the two is also very interesting. The price of Bitcoin in the futures market often causes the price of the spot market to fluctuate, so as long as you can control the price of Bitcoin in the futures market and short it hard, then the spot market will also usher in its own waterfall, provided that you have enough chips in your hand.

Some time ago, Buffett and Bill Gates stood up and began to accuse Bitcoin of being a scam, and Bill Gates even threatened to short Bitcoin. We will not explore the deep meaning behind these so-called capitalists. For an irrelevant Bitcoin, many bigwigs jumped out to accuse and even threaten to short it in a short period of time. This is a very strange thing in itself.

Immediately after yesterday's Bitcoin Consensus Conference, Nasdaq announced that it would open DX next month. Nasdaq is one of the largest stock trading markets in the world. With Nasdaq starting to support digital currency trading and the NYSE's intention to open Bitcoin futures, the whole thing is clear at a glance.

The market of Bitcoin is big enough. If Bill Gates really wants to short Bitcoin out of spite, then the various dealers and institutions in the Bitcoin futures market will welcome the biggest taker. The market value of the entire digital currency market is close to 450 billion US dollars, and Bitcoin accounts for 1/3 of the entire market. If you want to short Bitcoin completely, you have to pay a great price and may not succeed.

It is precisely because of the launch of futures that you can short, but because the total amount of Bitcoin is too small and bullets are needed, so the Bitcoin that was originally slowly rising may run wildly after the launch of futures, and then waterfall. In short, with the emergence of the air force, the Bitcoin cruiser will encounter greater waves. If it survives, it will transform into an aircraft carrier. If it can't, it may also be wiped out. The global economy is the sea, and the legal currencies of various countries are the waves.

1. The principle of shorting Bitcoin:

The principle of shorting: You don't have Bitcoin now, but you think the price of Bitcoin is going to fall. At this time, you can borrow some Bitcoin from the platform and sell it at a high price first. When the price falls to a low level, you can buy it back at a low price and return it to the platform. The difference in the middle is the money you make. This is the same principle as short selling in the futures and gold foreign exchange markets.

For example, when the price of Bitcoin is $10,000 per coin, you borrow 100 Bitcoins from the platform and sell them at $10,000 per coin. After deducting the cost, you earn $10,000 per coin100 = $1 million. However, this $1 million is not your net profit, because you borrowed those 100 Bitcoins from the platform and you have to pay it back. If the price of Bitcoin falls to $9,000 per coin in the future, you buy 100 Bitcoins at $9,000 per coin and return them to the platform. At this time, you spend $9,000$100$100,000, so you and the platform don't owe each other anything. In this wave of operations, you earn $1 million-$900,000 = $100,000.

Second, can Bitcoin be shorted now?

Since Bitcoin was driven out of the Chinese market, its price has not fallen, but has continued to hit new highs. It once had the momentum to replace gold as a necessary asset, and some countries even wanted to launch Bitcoin futures! From this perspective, the madness of Bitcoin has its basis, and this basis comes from the madness of global investors.

As of press time, the highest price of Bitcoin is 7923.40 US dollars per coin, directly killing the price of gold. As a new virtual currency, it is a miracle that it can be obsessed with global investors.

We all know that since the financial crisis in 2008, the global economy has continued to be sluggish, Europe has been overwhelmed by debt, the United States is still wandering in the vicious circle of stagflation, and Japan has not yet gotten rid of the burden of its real estate bubble burst... Speaking of ourselves, it is becoming more and more difficult to do physical business, and it is becoming more and more difficult to make money in traditional industries, but at the same time, the purchasing power of currency is continuing to decline. As a result, "Internet +" is becoming increasingly prosperous, and the virtual economy is gradually expanding.

Several ways to short Bitcoin

The first one is Bitmex, the world's largest Bitcoin futures exchange, which supports up to 100 times leverage, but it requires a bit of comprehensive ability to operate, remember to operate.
You can search for an article on Bitcoin Wikipedia that specifically writes a guide to BitMEX Bitcoin futures trading.

The second one is domestic. Currently, servers abroad also provide short Bitcoin. One issue I want to mention here is that I encountered a black history during the operation of Huobi. Passive leverage adjustment is likely to cause a liquidation, or it is certain to cause a liquidation.

The third one is to use CFDs to short in the traditional foreign exchange market. The only advantage is that it can prevent being cut by leeks based on the huge global trading volume. However, this type of platform is not easy to find, and it takes enough patience to find it. So far, I have operated at least 100+ platforms in the past three years, and none of them can be very satisfactory.

Virtual contracts are the buying and selling objects of contract transactions. They are uniformly formulated by contract exchanges and stipulate standardized contracts for the delivery of a certain amount of goods at a certain time. In the process of contract transactions, both parties to the transaction will obtain their respective rights and obligations. For example, if the buyer and seller of a contract trade 10 contracts for one ton of soybeans at a price of 5,000 yuan, the buyer of the contract will obtain the right and obligation to buy 10 tons of soybeans at a price of 5,000 yuan/ton on a certain day of a certain month. Similarly, the seller will also obtain the right and obligation to sell 10 tons of soybeans at a price of 5,000 yuan/ton on a certain day of a certain month. A contract that represents the rights and obligations of both parties is a virtual contract.

In most cases, investors do not actually perform the rights and obligations of the contract, but make profits by trading the contract before the contract takes effect, that is, before the delivery date.