How to go short (or long) on bitcoin?

Today we will talk about how to go short on altcoins, it is important to mention that it is not the best idea now, the most profitable trades on the crypto market are on the long singe. At moment, playing short, you can obtain a profit of maximum x2 – x3, but as a traders or investors we must be prepared for any critical situation.

Currently the best broker to go short with bitcoins and 11 other cryptocurrencies is IQOption. This broker makes it really as simple as possible. You can get started and profit from the next crypto dump by clicking this link!

Before we go into detail on how exactly you can go short with altcoins we’d like to list the most popular brokers/exchanges and the currencies that can get traded at the moment (September 2017):

CFD/Options BrokerTotal amountCurrencies 
IQoption12btc, eth, xrp, ltc, miota, etc, dash, zec, xmr, san, bch, omgStart Trading!
Plus50010btc, bch, eth, xrp, ltc, dash, nemStart Trading!
*your capital may be at risk!
eToro6btc, dash, etc, eth, ltc, xrpStart Trading!
AvaTrade6btc, bch, eth, xrp, dash, ltcStart Trading!

ExchangeTotal AmountCurrency pairs 
Kraken12XBT/EUR, XBT/USD, ETH/XBT, ETH/USD, ETH/EUR, ETC/XBT, ETC/ETH, ETC/USD, ETC/EUR, REP/XBT, REP/ETH, REP/EURStart Trading

There are a few ways you can go short on altcoins:

Margin Trading

One of the most common ways to short altcoins is by using a cryptocurrency margin trading platform. By using margin trading, one essentially “borrows” money from a broker to make a trade. Do keep in mind there is also a leverage factor, which can exponentially increase your profits – and losses. A good example of such a platform is Bitfiniex, here you can go short on ether pairs like ETCHBTC or ETHUSD. Margin funding is also open, allowing users to place Ether margin, funding offers and bids.

Also you can short certain coins on Poloniex. The main reason that a lot of these alt coins are not available to short is due to volume. Some of the altcoins, even on Poloniex, only have a few trades a day. With this little volume it is unlikely to find enough of a market for shorting (people lending their altcoins and people borrowing) and only big pairs have enough capitalization to find coins to borrow for short selling.

CFD Trading

Plus500

Plus500 is a worldwide CFD trading company. Plus500UK Ltd is authorised and regulated by the Financial Conduct Authority (FRN 509909). In the field of crypto margin trading they offer Bitcoin and all the major altcoins for margin trading (like Ethereum, Ripple, Litecoin, Bitcoin Cash and more). The main advantage lies on the fact that they are fully regulated company and margin leverage trading is possible.

Etoro

I have already described this platform in introduction, here you can sell / buy CFDs on BTC, DASH, ETC, ETHEREUM, XRP and LTC.

Go short on bitcoin ETF

GBTC chart:

gbtc chart

If you have access to the OTC market, your can go very easy short on Bitcoin ETF (“GBTC”).

Futures Market

Another way to go short on bitcoins is to go on futures market. A futures contract is a standardized forward contract, a legal agreement to buy or sell something, in our case is bitcoin, at a predetermined price at a specified time in the future. At predetermined price, parties agree to buy and sell the asset for the forward price. The specified time in the future — which is when delivery and payment occur — is known as the delivery date. Because it is a function of an underlying asset, a futures contract is a derivative product. Selling a Bitcoin futures contract indicates a bearish mindset and an expectation of how the Bitcoin price will decline by the predetermined date.

Short-Selling bitcoin assets

This works as follows: sell Bitcoin at a price you feel comfortable at, wait until the price drops, and buy Bitcoin again. Although this is how most “traditional” traders make money, it is an efficient way of shorting Bitcoin. The only downside is how getting the price movement wrong will result in a net Bitcoin loss.

Options Contracts

Option are a contract that gives the buyer the right, but not the obligation, to buy or sell a specified quantity of a futures contract at a set price within a set period of time, regardless of the market price of the futures contract. The price paid for the option is called the premium. You can use options to place a bet that the value of Bitcoin will be higher or lower than a particular value at a certain point in the future (say after 1 week, or 1 day), or that the value will or won’t hit a certain level above or below its current price within a particular time period.

You can purchase options contracts or create your own and pay with BTC through services such as BTC Oracle.

Binary Options

In don’t really like binary options and *I recommend to look at it as an option to go short, only when you don’t have possibility to short in another way. Binary options are a simplified type of options contract, usually aimed at day traders. You simply bet that the price will be higher (in which case you are buying a ‘call’ option) or lower (a ‘put’ option) than its current value at a specified point in the future – usually measured in hours with the end of that day as the limit. This fill gives you a fixed profit, usually around 40-80%, if you are correct, but you will lose everything if you are incorrect. This is a very high risk method which often appeals to gamblers.

You can buy Binary options for BTC at Satoshi Options or for USD at IQOption.

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