How to Short Bitcoin and Other Crypto

Short-selling is an investment method that allows you to benefit from drops in the price of a particular asset. This post will teach you how to short-sell Bitcoin and what to look out for. We will also cover everything you need to know about how to short crypto, some crypto short-selling techniques, and what you need to know.

How to Short Crypto in 3 Steps Summary

1. Sign up to Margex, Binance, MEXC, or Bybit and verify your account
2. Load your futures account with USDT
3. Choose “Sell/Short” and the amount that you wish to sell short.

That’s how to short-sell Bitcoin in a nutshell. If you want a deeper explanation about short selling, how it’s done step by step, and what to look out for, keep on reading.

Remember that neither I nor anyone on the 99Bitcoins team is a financial advisor, and this post is not financial advice. The purpose of this lesson is to explain short selling as a tool. It’s available in various markets and is also available for cryptocurrencies, so I want you to understand better what it is.

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Top Crypto Exchanges to Short Crypto

Think crypto prices are about to tank, and you wonder, “Where can I short crypto?” We’ve got the top places in the industry that allow users the ability to go long or short on crypto. Our team of experts have personally used, verified, and reviewed the exchanges in this article to bring you our top picks for the most trustworthy, secure and useable crypto platforms in the industry.

1. Margex: Crypto Trading Platform with up to 100x Leverage

Margex makes our top pick for users who seek high leverage. The platform lets traders crank up the risk with up to 100x leverage while keeping things user-friendly. The best part? No KYC. Just sign up with an email and password, and you’re ready to trade with no hoops to jump through.

Margex taps into deep liquidity pools and a high-speed trading engine to keep things lightning-fast—trades execute in under 8 milliseconds on average. With the ability to process up to 100,000 trades per second, the platform is built to handle high-volume, volatile markets without the headache of slippage.

Margex launched in 2019, and it’s important to note that it is not backed by tier-one regulators yet. That said, we don’t feel that is a large risk as the platform employs a 100% cold storage strategy, 2FA, and uses real-time fraud detection to help keep users’ funds safe. For those new to crypto futures, the platform’s copy trading feature lets you jump into trades without diving deep into market analysis.

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2. MEXC: Leading Crypto Exchange with up to 100x leverage

MEXC is another leading crypto exchange that supports thousands of markets, including some of the best meme coins, such as Pepe, Sundog, Dogecoin, Bonk, and Shiba Inu. The maximum leverage when trading large caps is 200x.

Smaller-cap markets get lower leverage, ranging from 20x to 100x. Traders can also go for inverse futures, where settlements happen in the underlying crypto. One of our favorite things about MEXC is the low trading fees, sitting with market takers only costing up 0.02% per trade.

No commissions are charged when placing limit orders. MEXC is also a great option for trading anonymously. No personal information or ID verification documents are needed, although withdrawal limits apply. MEXC also offers advanced trading tools, such as technical indicators. Other markets include spot, copy, and P2P trading. MEXC has also ended up as #1 on our list of best Coinbase alternatives.

Feel free to check out our in-depth MEXC Review to learn more about this top-ranking crypto exchange.

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3. BloFin – Secure Crypto Platform with User-Friendly Interface

BloFin is a top crypto exchange, serving up a solid derivatives and spot trading experience with over 400 crypto pairs. We found BloFin to be a rock-solid, reliable trading platform. With up to 150x leverage and a stacked selection of crypto assets, traders get plenty of ways to play the market.

We also appreciate BloFin’s approach to security with its industry-level security and asset management. The platform holds a 1:1 reserve of all user crypto holdings, providing full transparency of funds. Additionally, asset custody is held by Fireblocks to maintain the protection of assets. BloFin also offers a high-performance trading app, available for iOS and Android.

Beyond smooth crypto trading, BloFin packs in extra firepower with trading bots and copy trading. The signal trading bot lets users automate trades based on preset conditions. And for those who’d rather follow the pros, BloFin’s copy trading feature makes it easy to mirror the moves of top-tier traders.

Read more: BloFin Review

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4. OKX – Low-Fee Platform For High-Performance Trading

OKX is well suited for those looking for a high-performance trading and matching engine paired with a well-established crypto platform with a fantastic design. OKX offers everything from bot trading to a wide selection of crypto futures and derivatives products, so it has something tradeable for everyone.

The maximum leverage available on OKX is 100x and the market features some of the best altcoins including Solana, Aave, Pepe, Toncoin, Maker, and SushiSwap.

OKX offers an NFT marketplace, an industry-leading crypto wallet, and deep options chains for Bitcoin and Ethereum, alongside advanced analysis tools. In terms of fees, OKX is on the low-fee side with fees starting at 0.02% when placing limit orders. Market orders are more expensive at 0.05%.

Be sure to check out our dedicated OKX Review if you want a deeper understanding of this crypto exchange.

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5. Kraken – A Highly-Rated Crypto Trading Platform Offering up to 50x Leverage

When searching for the top crypto trading platforms to short crypto, it is nearly impossible to beat Kraken. Kraken is one of the longest-standing and highly rated cryptocurrency exchanges in the industry. We revere this platform as it is one of the most trustworthy and reputable exchanges in the industry and they take security seriously. Kraken has its own security team, Kraken Labs, and is the only long-standing crypto exchange to never be hacked.

Kraken is also widely considered to have the best customer service in the crypto industry and is very beginner-friendly, making it great for beginners and pros alike.

Okay, so what gives? If Kraken is so “amazing’, why is it only #5 on our list? Well, Kraken isn’t the cheapest exchange around by a wide margin. All those security protocols and customer service representatives cost money, but many feel that paying Kraken’s fees is worth it as they are trusting what may be the most secure exchange in the industry. Also, being highly regulated, Kraken has the same “Achilles heel” as Coinbase, and that is that regulation-friendly exchanges cannot offer all the same high-risk, degen products that other exchanges have and they have strict KYC compliance requirements.

Kraken’s users can trade with up to 50x leverage but it is important to note that leverage limits may vary for cryptos with limited liquidity.

A key benefit of choosing Kraken includes its transparent fee model. Market takers pay 0.05% per trade, while market makers pay even lower fees, starting at 0.02%, but spot trading fees come in higher with 0.25% on maker fees and 0.40% on taker fees. On the plus side, Kraken has no deposit fees for crypto transfers, and users can fund their accounts using a wide range of payment options, including bank transfers, debit/credit cards, and select stablecoins.

Kraken also has a great selection of trading tools, including advanced charting, risk management features, and API connectivity for professional traders.

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6. Bybit – Supports Thousands of Assets and Advanced Trading Tools   

Next up is Bybit, a heavyweight in the crypto futures game with 45 million+ users and a tier-one reputation. Traders get access to hundreds of perpetual futures markets with up to 125x leverage and thousands of spot pairs for longing or shorting crypto. That includes some of the best cryptocurrencies to buy like Bitcoin, Ethereum, Solana, Polygon, Dogecoin, Cardano, and Uniswap.

Bybit is built for serious traders. With TradingView integration, hundreds of technical indicators, high performance trading and matching engine, and customizable drawing tools, you’ve got everything you need to analyze the market. Plus, there’s copy trading and automated futures bots for hands-free trading. Traders can get started with no KYX and trade on the web or through the iOS/Android app.

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What Does Shorting Mean in Crypto?

Shorting in crypto means betting against the price of a cryptocurrency, expecting it to fall. Short selling (often referred to as ‘shorting’) is an investment/trading method that involves profiting from an asset’s price drop. In the crypto market, this is done by borrowing the cryptocurrency, selling it at the current market price, and then buying it back at a lower price to return to the lender, pocketing the difference as profit.

How Does a Short Work?

Basically, shorting works by borrowing an asset (such as Bitcoin) and selling it immediately at its current price. Later, you repurchase Bitcoin to repay the person or company you borrowed it from. This sounds more complicated than it actually is with the purchasing, borrowing, selling, and repaying happening autonomously behind the scenes on the trading platform’s back end. All the trader needs to do on their end is simply hit a couple of buttons to place the trade.

Hopefully, when the trader goes to repurchase the Bitcoin, prices will have dropped, so purchasing the assets that need to be paid back will be cheaper. The trader then gets to keep any leftover money as profit. Traders can short crypto on different time frames, with some active traders closing positions in a matter of minutes while others may choose to short an asset for days, weeks, or even months.

Let’s illustrate Bitcoin short selling with an example:

• You short-sell 1 Bitcoin when the price is $88,000. This means you borrow 1 Bitcoin and sell it for $88,000.
• The price of Bitcoin drops to $86,000.
• You repurchase 1 Bitcoin to give back to the company or exchange you borrowed from at $86,000.
• You keep the difference in price. Your total profit is: $88,000 – $86,000 = $2,000

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How to Short Crypto

To short Bitcoin & crypto, you’ll need to sign up for an exchange or platform that offers short selling and then place a short sell order.

We recommend the following trusted exchanges that the 99Bitcoins team has personally used, and reviewed, and have strong security, great support, and are reputable in the crypto industry:

When the trader places their trade, the agency will then sell the bitcoins from their own supply, assuming the trader will repay them with an equal number of bitcoins in the future.

For example, if you short-sell 10 bitcoins, you will eventually have to “cover” those 10 bitcoins, whether prices rise or drop.

If prices drop, buying these 10 bitcoins back will be cheaper to repay the exchange. If prices rise, it will be more expensive.

When short-selling, the firm or individual who loaned the Bitcoins to you can generally recall the assets at any given time and must give you only short notice. So make sure you read any rules, regulations, or guidelines for “covering” any assets you short sell.

With markets fluctuating at such a rapid rate, costs can swing wildly, putting you at risk. Short selling can be especially risky if the lender calls in the assets before prices have a chance to drop.

Short selling is actually very common with stocks, and most major trading platforms allow you to short stocks.

There are a variety of ways to short Bitcoin:

Short Sell CFDs

CFD stands for Contract for Difference. This means that instead of borrowing the Bitcoin, selling it, and then buying it back at a lower price, you agree to pay the difference.

So, in the case of CFDs, you will get paid the difference if the price drops—without needing to go through all the hassles of buying and selling coins.

Shorting via a Bitcoin Exchange

Bitcoin exchanges geared towards crypto traders offer short-selling options; some allow leveraged shorting. Leveraged shorting means you can borrow and use more money from the exchange than you actually have to buy the bitcoins you want to short.

For example, say you have $1,000 on the exchange and leverage on a 1:3 ratio. You can now short-sell up to $3,000 (three times what you have), which would be three times the leverage.

Leveraging is considered risky since if things don’t go as you intended, the exchange will close your trade sooner than you expected (because they know you’re using the money you don’t own). In other words, leveraging magnifies both gains and losses. Using leverage is extremely risky and high leverage is a tool best used by professionals.

Put Options

Certain specialized exchanges, such as Binance, Bybit, and OKX, offer Bitcoin options trading. Buying an option grants the ability, but not the obligation, to trade at a specific price by a certain expiry date.

If you have experience with options trading, this method might suit you. Otherwise, it’s not recommended for beginners. Options are complex but do allow for greater flexibility and higher leverage. Check out our Complete Guide to Crypto Derivatives to understand options and futures trading.

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When Should You Short Sell?

Shorting Bitcoin is trading against a long-term uptrend; the longer the trend remains, the riskier it becomes.

One thing to remember – the maximum profit potential of a short is limited to a Bitcoin price of $0, whereas buyers (those going “long”) have no limit on their profit.

If you examine many different asset price charts, you’ll soon realize the truth of the old trading aphorism, “Price takes the stairs up, but the elevator down.”

In other words, bullish moves take time to build and develop, whereas bearish moves tend to be relatively short and sharp.

Trying to short the top of a giant bull run is tricky; you’ll likely stop out multiple times as Bitcoin keeps rising like a stubborn zombie.

Keep in mind that if many traders are positioned similarly, a price surge may result as fearful traders compete to close their shorts (i.e., they buy back the Bitcoin they sold). This is known as a short squeeze.

Analyzing the Market for Short Sell Opportunities

Beyond technical analysis, it helps to know the Bitcoin space well. For reference, here are different types of events and how they affected Bitcoin’s price.

Past events that triggered major sell-offs

• Failure, bankruptcy, or hacks of major crypto exchanges.
• Hostile regulatory action in major countries (e.g., “China bans Bitcoin” and SEC clamps down on ICOs).
• Well-known developers quit the Bitcoin development team (e.g., Mike Hearn, Gavin Andresen).
• Heightened hard fork risks (e.g., Bitcoin forking into Bitcoin Cash).
• Delays or setbacks in widely-desired upgrades (e.g., SegWit, Lightning Network).

Events expected to have a negative impact on price

• Any contentious hard fork.
• Breach of the cryptographic primitives used in Bitcoin (SHA256, secp256k1).
• The potential discovery of Bitcoin code exploits that threaten wallet security or network operation.
• Hostile actions against Bitcoin by governments.
• Movement in the first million or so bitcoins mined by Satoshi Nakamoto.
• Weak economic conditions and recessions

Events that have had little impact on price include

• The failure of darknet markets (e.g., Silk Road or Alpha Bay).
• Claims of having unmasked the identity of Satoshi Nakamoto (e.g., Dorian Nakamoto or Craig Wright).
• Hostile pronouncements from journalists, economists, politicians, bankers, etc. (see our Bitcoin Obituaries section for over 450 times Bitcoin has been proclaimed “dead”).

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The Risks of Shorting Bitcoin

I should warn you that short-selling any asset is a high-risk venture. Normally, when you invest in an asset, your losses are limited to the amount of money you have invested in that asset.

For example, if you invest $10,000 in a stock that suddenly collapses and becomes worthless, your losses will be limited to the $10,000 you invested.

When short selling, however, your losses could extend far beyond your initial investment, which is very important to consider, especially with Bitcoin. The easiest way to explain this is to use another example:

Let’s say you short-sold Bitcoin at $100 per coin. You borrowed 10 bitcoins, or $1,000, to do this. You are counting on the price dropping below $100 per coin to rebuy the 10 bitcoins cheaper than you sold, return them to the lender, and then pocket the difference.

However, you could be trapped if the price didn’t fall to your target or had a sudden upward spike. So let’s assume that all of a sudden, Bitcoin’s price went up to $4,000, which can definitely happen with Bitcoin. This means the 10 bitcoins you must pay back will now cost you $40,000!

As you can see, short-selling any asset can be very risky. You must be very careful if you want to short-sell Bitcoin or anything else.

Only invest if you are confident that prices will drop and have money to cover your losses if investments rise. Ensure you watch prices closely and cut losses if prices rise too quickly.

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Conclusion – Should You Short Bitcoin?

Shorting Bitcoin is a useful but very risky way to make money. By borrowing bitcoins and selling them when the price is high, then buying them back when the price is low, you can earn money on the difference even when markets are bleeding.

Shorting usually isn’t recommended for traders just starting out because of the high risk. If you do decide to short Bitcoin, make sure you only invest money you can afford to lose. Also, make sure to stay up-to-date with current events so you can anticipate any change in the price direction.

Have you had any experience with short-selling Bitcoin? If so, I’d love to hear about it in the comment section below.

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FAQs

Can you short crypto?

Yes, you can short cryptocurrencies by using margin trading, futures, or options on various platforms that support these instruments.

How to short Bitcoin?

To short Bitcoin, you can use margin trading, futures contracts, or options, which allow you to sell Bitcoin with the hope of repurchasing it at a lower price.

How to short crypto?

You can short crypto by borrowing the cryptocurrency on exchanges that support margin trading or by using futures and options to bet on a price decline.

Can you short Bitcoin?

Yes, Bitcoin can be shorted through platforms offering margin trading, futures contracts, or put options.

How to short crypto on Coinbase?

As of the latest information, Coinbase does not directly support shorting crypto. You may need to use other exchanges that offer margin trading or futures.

Where to short Bitcoin?

You can short Bitcoin on exchanges like Binance, Bitfinex, and Kraken, or through futures contracts available on exchanges like CME.

Should I short Bitcoin?

Shorting Bitcoin can be risky due to its volatility, so it’s essential to understand the risks and assess your financial goals before making this decision.