Shorting Bitcoin on Binance and Coinbase is akin to a high-stakes gamble where mastering margin trading and futures contracts is key to tilting the odds in your favor.
In trading, the term “shorting” or “short-selling” describes a strategy where a trader borrows cryptocurrency from a broker, another trader or a crypto trading platform at the current market price and sells it promptly, aiming to buy it back at a lower price later, thereby profiting from the price difference.
By short-selling Bitcoin (BTC), traders take a loan from a trading platform, sell it, hoping its value will decline, and then repurchase it to repay the loan. If the price drops, they repurchase Bitcoin at a lower cost and thus profit.
As alluring as it may seem, shorting Bitcoin can be risky. If Bitcoin’s price goes up, traders will still need to purchase it at a price greater than what they originally traded for, potentially resulting in large losses.