Many people see Bitcoin as an investment for the future, in the hopes of making a healthy profit depending on how the price of this digital currency evolves over the next few months or years. On the one hand, there are those who hold Bitcoin long-term, but various platforms provide traders with the opportunity to short Bitcoin as well. For those people looking how to short Bitcoin, the following guide will get you on your way.
Also read: What Is Fintech?
Why And How To Short Bitcoin
Some people might be wondering why they need a guide on how to short Bitcoin in the first place; as it would be counterproductive to hope the digital currency drops in value. While this is a very grand statement and a sign of being a firm believer in Bitcoin long term, traders do not care all that much about the things that will happen next month or in a few years. They want to profit as quickly as possible, which is why a guide on how to short Bitcoin can be quite beneficial.
Once enthusiasts gain a better understanding of how the short Bitcoin, they might see it is an another form of investment in the digital currency. Granted, this is an investment for personal gain, rather than seeing the digital currency succeed, and its moral ethics are not the topic of discussion in this article. However, there are different options on how to short Bitcoin, as there are quite a few platforms providing this functionality.
Most of the day traders will look at Bitfinex as a way to short Bitcoin. Most Bitcoin enthusiasts will know Bitfinex as an exchange platform, which is in the top five of most active trading operations in the digital currency space. However, they also offer a tool useful to this ‘how to short Bitcoin’ article. The peer-to-peer lending service built into Bitfinex lets users borrow digital currency to those looking to short Bitcoin, for which they will be rewarded with an interest rate.
That being said, there is more to shorting Bitcoin, as Bitfinex offers a market for USD-denominated loans as well. Funds deposited in a Bitfinex account can be used as collateral for loans, which can then be leveraged as a way to short Bitcoin. Bitfinex answers the “how to short Bitcoin” question by letting users do so with either BTC or USD, creating a lot of opportunities for day traders.
Bitfinex is not the only allow for those people looking for ways on how to short Bitcoin, though. BTC-E offer similar functionality in the form of leverage and shorting options, but day traders can also trade against the company itself. However, this situation can create certain conflicts of interest, which need to be taken into account before shorting Bitcoin through BTC-E.
Forex brokers will gladly help people who want to know more about how to short Bitcoin. The main difference with a forex broker is the wider range of deposit and withdrawal options available, which can be more appealing to traders who want no ties with Bitcoin itself. But there is a twist to these broker firms, as not all of them work with international clientele.
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