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How to Short Bitcoin – A Simple Guide [2020]

When Bitcoin made its dramatic decline in 2018 from all-time highs, many traders may have wished that they could profit from the thousands of dollars that were wiped off Bitcoin’s market cap and spot price. Well, it may surprise you to learn that many traders did – and they still are in 2020. Trading a […]

How to Short Bitcoin – A Simple Guide [2020] was originally found on Blokt – Privacy, Tech, Bitcoin, Blockchain & Cryptocurrency.

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When Bitcoin made its dramatic decline in 2018 from all-time highs, many traders may have wished that they could profit from the thousands of dollars that were wiped off Bitcoin’s market cap and spot price.

Well, it may surprise you to learn that many traders did – and they still are in 2020. Trading a derivative of Bitcoin allows traders to profit from both positive and negative price movements in the market, but how is this possible, and how can you get started?

Find out in our how to short Bitcoin in 2020 guide, where we’re going to break down the fundamental concepts behind ‘shorting’ the market.

Shorting Bitcoin

So, you’ve decided you want to open a short position on Bitcoin. How would you do this? The first step is to identify and sign-up for a cryptocurrency derivatives platform. We’re going to review some of the best ones below.

For this, you’ll need to have some Bitcoin ready to deposit to the exchange. There’s plenty of options to buy BTC with fiat, such as USD or EUR. We review the best ways to buy Bitcoin in 2020 here, so make sure you’re ready to deposit before you start.

Once you’ve got some BTC, open a cryptocurrency derivatives exchange account and deposit your Bitcoin. Unlike traditional exchanges, most crypto derivatives exchanges don’t require KYC or identity verification, so you can start trading in minutes.

Top Exchanges for Shorting Bitcoin in 2020

As the cryptocurrency markets have matured, the number of derivatives exchanges launched to meet demand has increased, and there are now plenty of trusted options available for traders looking to short Bitcoin.

Let’s look at some of the top trading platforms:

Rank Exchange Deposit Methods Fiat Accepted Cryptocurrency Supported HQ
1 BitMEX [Full Review] Crypto None BTC, ETH, LTC, BCH, EOS, XRP, ADA, TRX Hong Kong
2 FTX (Full Review) BTC, ETH, Stable coins None BTC, ETH, LTC,BCH Hong Kong

BitMEX Homepage

One of the longest-serving and most trusted Bitcoin trading platforms, BitMEX is a peer-to-peer trading platform for Bitcoin, Ethereum, and a handful of other cryptocurrencies.

BitMEX was established in 2014 and has consistently remained as one of the top-volume crypto derivatives exchanges in the world since its launch.

There are a number of Bitcoin options contracts available on BitMEX, which allow traders to open long or short positions.

Traders can utilize up to 100x leverage on BitMEX, which boosts your position size when opening a trade. There’s also an insurance fund that prevents traders from getting liquidated unfairly in the event of high volatility.

BitMEX’s fees are 0.075% for takers regardless of their leverage. They charge 0.01% on long funding trades, and -0.01% on short funding, with funding intervals of 8 hours. There is a 0.05% settlement fee on traditional Bitcoin futures.

Deposits on BitMEX are made in Bitcoin, which uses the ticker symbol ‘XBT’ for the purposes of BitMEX’s futures contracts.

BitMEX is one of the most well respected Bitcoin trading platforms, and we highly recommend it for opening a short position on Bitcoin. You can read our full BitMEX review here.

FTX.com is one of the most advanced trading platforms for shorting Bitcoin.

Established in 2019, FTX.com has quickly become one of the most popular crypto derivatives exchanges in the world. Built by the quantitative trading team of blockchain professional services firm Alameda Research, FTX.com has been developed from the ground-up and offers advanced trading with low fees.

Traders can use FTX.com to short Bitcoin with up to 100x leverage, with options contracts for Bitcoin and a range of other top cryptocurrencies.

Another innovative feature of FTX.com that we haven’t seen implemented on other exchange platforms is their ‘BULL & BEAR’ leveraged tokens.

These are ERC20 tokens which represent either a long or short position in an underlying asset, including Bitcoin, and it’s an incredibly quick and easy way to take a position in the market.

FTX has a tiered fee structure for traders. At tier 1, taker fees are 0.07%, and this is reduced to 0.04% at the highest tier – which can be achieved by holding FTX tokens. There are no fees on futures settlements.

Deposits on FTX.com are made in Bitcoin. Overall, FTX.com is a great option for opening Bitcoin shorts. You can read our complete guide on FTX exchange here.

Huobi Global

Huobi Global is a trusted and long-serving exchange from Singapore.

Huobi Global is a Singaporean spot and derivatives exchange launched in 2013. It’s one of the highest volume exchanges in the world and has long been a favorite among East Asian cryptocurrency traders.

There are multiple derivatives and options contracts available for Bitcoin on Huobi Global, which include weekly, bi-weekly, and quarterly futures – which refers to the point at which the contract expires.

Huobi offers greater leverage than some of its competitors, with up to 125x on its bi-quarterly futures contracts, which let traders open short positions on Bitcoin.

You can deposit BTC and a range of other cryptos on Huobi for opening short positions. Huobi has an interest rate on margin of 0.098% and a 0.04% taker fee on Bitcoin futures contracts.

As one of the safest and most frequently used sites in the world, Huobi Global is a great choice for opening a Bitcoin short position. Find out more about Huobi Global in our complete guide here.

What is Shorting?

When you buy an asset or a derivative of an asset with the intention of profiting from the asset going up in price, you are said to be ‘going long’. On the other hand, a trade placed with a view to profit from an asset’s decline in price is called ‘going short’ or ‘shorting’ the market.

While it’s typical to buy an asset at spot price and physically hold it to open a long position, it’s not as simple to open a short. This is because you’ll need to sell Bitcoin in order to repurchase it at a lower price. For this, you’ll need to use a Bitcoin derivatives exchange, and trade a futures or options contract.

Traditional Market

Some of the options for shorting Bitcoin in crypto trading are known as ‘naked shorts’ – meaning you don’t have to own the asset before you sell or short it. However, for most crypto derivatives exchanges, you will need to deposit some Bitcoin to the platform before you can open a short.

Short sells can often be opened with leverage, which is the act of borrowing against your original capital in order to increase your position size. This can magnify gains, but also increase losses. You can read more about that here.

We’ll explore some of the most popular crypto derivatives exchanges below, but first let’s look at some of the pros and cons of shorting Bitcoin.

Benefits of Shorting Bitcoin

There are a few benefits of shorting Bitcoin, mainly for short-term traders but long-term holders may also want to consider opening a short. These benefits include:

  • More opportunities for profit – If the market turns bearish, you can open a short position to profit from the downward movement. In the short-term, this means you don’t have to be left holding a bag of BTC in a bear market.
  • Portfolio diversity – If you’re bullish on the blockchain industry as a whole, but not Bitcoin, then shorting Bitcoin can be a great way to maximize profits from alt-runs while also profiting from a decline in BTC price.
  • Derivatives over ownership – This can be a pro or a con depending on how you look at it. When you short Bitcoin, you’re trading a derivative. This means you don’t own the underlying asset, and so positions are sometimes easier to close or open, and you don’t have to worry about Bitcoin custody.
Bitcoin / USD derivatives illustration – Source: shutterstock.com

Negatives of Shorting Bitcoin

While shorting opens up possibilities to profit from periods of Bitcoin price decline, there are a few considerations you should know before opening a position:

  • Effect on the market – If you’re bullish on Bitcoin overall, but you want to profit from short-term bearish action, then you should consider that the number of short positions open influences the overall trading sentiment on Bitcoin as a whole.
  • Risk of liquidation – Trading platforms that allow traders to short the market also offer options for leverage. Trading with leverage allows you to borrow against your initial funds and trade with a much larger position. However, the risk for losing funds is also greatly magnified and you should keep this in mind while trading.
  • Fees – When you short, you’re essentially borrowing money from the exchange in order to place a trade. Unlike buying Bitcoin at ‘spot’ price where the asset belongs to you, when shorting you don’t own the underlying Bitcoin. As a result, you must pay fees – such as ‘overnight funding’ – on your position. This makes it unsuitable for long-term holds.
  • Volatility – Just as the market moves quickly into a bearish phase, it can move quickly back into a bullish trajectory. Only open a short if you’re sure the price of Bitcoin has a significant degree of downside potential.
Bitcoin Trading

Key Things to Remember When Shorting BTC

Hopefully, this guide will have helped you decide if shorting Bitcoin is right for you, and help you choose a trading platform on which to open a short.

As derivatives trading is a fairly technical process and comes with some risk, we recommend you take the time to read our in-depth guides for each exchange, linked in the descriptions above.

Likewise, if you’re a seasoned trader with plenty of short experience looking to move into the crypto markets and you need advice on the best ways to buy Bitcoin in 2020, read our complete guide here.

What are your thoughts on shorting Bitcoin? Let us know in the comments section below!

References

Blokt is a leading independent privacy resource that maintains the highest possible professional and ethical journalistic standards.

Source: https://blokt.com/guides/how-to-short-bitcoin

Blockchain

India’s Crypto Ban Uncertain as Finance Minister Touts a Window for Experiments

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India’s Finance Minister told CNBC that the country’s reserve bank is not shutting out cryptocurrencies entirely. She said that while the Reserve Bank of India will decide which unofficial cryptocurrencies will be used and regulated, there will be “a window for experiments” in the industry.

New Lease Of Life For Bitcoin In India

India’s minister of finance, Nirmala Sitharaman, spoke briefly on the country’s standpoint on digital assets in a CNBC virtual townhall. She said that several negotiations are being held with the Reserve Bank of India regarding an impending ban.

A lower parliament in India raised a bill to ban all private cryptocurrencies in January. It said that the move was to facilitate the development of the country’s CBDC, which the RBI will issue and regulate. This did not go down well with cryptocurrency enthusiasts and industry stakeholders in the country. In response, they started an online campaign tagged #IndiaWantsBitcoin to get the RBI to reconsider its stance.

Sitharaman’s remarks suggest that the campaign was quite impactful. She said:

“A lot of negotiations and discussions are happening around the cryptocurrency with the Reserve Bank of India. RBI will be taking a call on what kind of unofficial cryptocurrency will have to be planned and how it has to be regulated. However we want to make sure that there is a window available for all kinds of experiments which will have to take place in the crypto world. There will be a very calibrated position taken. A lot of mixed messages are coming from across the world. World is moving fast with technology, we cannot pretend that we don’t want it.”

Sitting On The Fence

India is renowned for its controversial stance on bitcoin after several “back and forth” regulations. The government had initially banned cryptocurrencies in 2018 after warning investors. The halt was later overturned by the Supreme court. The apex court described the ban as “unconstitutional.”

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India’s lower parliament received backlash from the global crypto community for what seemed like a ridiculous exception to its proposed cryptocurrency ban. It said it will “allow for certain exceptions to promote the underlying technology of cryptocurrency and its uses.” Regulatory bodies in the country had severally pushed the motion to advance blockchain technology adoption while banning cryptocurrencies.

Its non-committal approach has raised question marks regarding the country’s future in the digital asset space.

Digital Rupee Still In The Picture

Although Sitharaman did not discuss the progress of the digital rupee, the second most populous nation may take a cue from its neighbors, China.

China has continued trials of its digital yuan and has distributed millions of dollars in the digital currency to its citizens.

India’s Reserve bank governor, Shaktikanta Das, said last month that although there is no set date for the launch, the digital rupee was “receiving full attention.”

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Source: https://cryptopotato.com/indias-crypto-ban-uncertain-as-finance-minister-touts-a-window-for-experiments/

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Cardano Price Analysis: 07 March

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The cryptocurrency market has been constantly forming crusts and troughs as it strives towards stability. Cardano’s market witnessed a similar trend wherein the price surged towards the end of February but has been correcting since.

At the time of writing, Cardano was trading at $1.13 with a market capitalization of $35.68 billion.

Cardano six-hour chart

Source: ADAUSD on TradingView

The above chart noted that the current market movement had formed a descending triangle and the price was sloping lower. The price has been supported at $1.06 as the trend becomes bearish.

This downwards trending price has been indicating a further drop making its way into the ADA market.

Reasoning

After witnessing increased volatility in the recent past, the ADA market is now seeing the volatility reduce. However, it has not yet shrunk to a level where a price swing was not possible. Since the descending triangle was a bearish trend, a price drop could make the market more volatile.

The signal line and the 50 moving average were also moving above the price candles and were acting as a point of resistance. Meanwhile, market momentum has turned negative due to the rising selling pressure in the market.

Despite the shift in momentum, the Relative Strength Index has remained close to the equilibrium zone. This could be a sign for the consolidation of the price at the current level but as bearishness increases, the consolidation phase may lead to the price breaking down.

Crucial levels

Entry-level: $1.07
Stop-level: $1.17
Take profit: $0.91
Risk to Reward: 1.53

Conclusion

The current ADA market has been seeing the price drop to its $1.06 support. As the price tests the support, the indicators have been highlighting an incoming fall. This fall could push the digital asset under the support and could bring the value under $1.


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Source: https://ambcrypto.com/cardano-price-analysis-07-march

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HODLing early leads to relationship troubles? Redditors share their stories

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Crypto investments have reportedly been a source of strife in relationships, sometimes leading to breakups and even divorce. 

According to a Reddit post from February 2015, a then 28-year-old woman using a throwaway account claimed that she was incredibly upset at her husband, who had not stopped purchasing Bitcoin (BTC) since 2013 without consulting her. She estimated that he had bought more than $22,000 in the crypto asset in the two years prior to the post, when the price reached a high of more than $1,000 but also dipped under $200.

“I kept telling him to sell as the price was rising and he promised me a big year in 2014,” she said. “The price kept falling and he continued to buy more. He makes more money than I do but we are building a future together and we have a shared bank account. He kept telling me this was for our kids’ college fund, to buy a house, etc.”

In the early days of Bitcoin and crypto when digital currencies were often used as a running joke for late night talk shows and comedians, many considered investing in the technology financially immature at the very least. Some people still do, even with the BTC price at more than $50,000 again.

The Redditor referred to her husband as “brainwashed,” saying he was “robbing [her] of happiness” and ruining her job by bringing up Bitcoin at her marketing events.

“After a recent price crash, he actually bought more using our vacation fund that I have been saving away for and planning. All gone, in Bitcoin never to be seen again.”

It’s unclear whether the couple stayed together following the response from the post, or if the husband sold some or all of the Bitcoin to ameliorate his wife’s financial concerns. The user compared her spouse to a drug addict and considered “staying in a hotel for a few weeks” to think about whether divorce was an option.

However, with the benefit of hindsight, the husband’s early investment could have easily paid off in the millions of dollars. Even assuming he purchased BTC after the price surge to $1,000 in November 2013, the 22 coins would now be worth more than $1 million.

Because the story was posted on the r/relationships subreddit rather than a pro-crypto group like r/Bitcoin or r/cryptocurrency, many of the Redditors encouraged the user to separate her finances and consider divorce proceedings. Few crypto enthusiasts jumped on the thread to comment, but one predicted that the BTC would one day be “worth fortunes” and recommended the husband continue to HODL.

Another story from a Redditor following the 2017 bull run — which brought in many newbies to the crypto space — claimed that his girlfriend was considering breaking up with him following “a huge investment in cryptocurrencies.” However, digital currencies seem to have played less of a role in his story, as the user said he crashed a car while driving drunk and was pressuring his significant other to leave her job.

Though many crypto traders know the price of Bitcoin and other digital currencies will likely continue to be volatile, the adoption and investment from major companies have helped push the technology closer to the mainstream, and made it seemingly more responsible for investors to get in on the action earlier rather than later. Already Shark Tank star Kevin O’Leary has claimed to have increased his stake in Bitcoin while asset management firm Third Point CEO Dan Loeb recently said he had been doing a “deep dive into crypto.”

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Source: https://cointelegraph.com/news/hodling-early-leads-to-relationship-troubles-redditors-share-their-stories

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