In recent years, many traders have discovered that there are several ways to make money with Bitcoin. Of course, they can invest, buy and sell, or do micro jobs, but there are other methods. One of these methods is shortening Bitcoin. What is that exactly? And how do you do that? In this article, we take a closer look at the technique behind Bitcoin short selling.

What is Bitcoin shorting?

By 'Bitcoin shorting' we mean the process of selling the cryptocurrency, with the hope that its value will fall and you can buy it back for a lower price. By doing this, traders earn the profit from the difference in market price. In other words, you can make money by hoping to lose the value of the coin.

When selling Bitcoin, the adage applies: 'Buy low and sell it high'. In principle, you borrow the coins with the idea that you will return them later. You sell the coins at the current market price, knowing that the Bitcoin will be worthless later. When the prices fall, buy the coins back and give them back to whoever lent you the coins. What you earn now is the profit from the difference in price: the difference in price between the time of selling and buying back.

The difference in the price can be a profit but also a loss. That is why this technique is only wise if you really believe that prices are falling. Therefore, there are great opportunities to make huge profits in this volatile market, but you can also lose a lot. Therefore, caution is always required when applying these types of techniques.

Sell ​​Bitcoin short

To short Bitcoin, you must use a crypto trading platform where you can place the short sell order. After that, the trading platform sells the BTC coins on your behalf from its own stock so that you can pay them back later. If you sell 12 Bitcoin, you have to return it later, regardless of whether the price rises or falls. 12 coins are and remain 12 coins.

When the price drops, it is much easier to return these 12 coins. However, it is not without risk. When the price goes up, you have to pay a lot more to return the coins. Therefore, read the rules and regulations of the company or person from whom you borrow the coins first.

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