5 Ways How to Short Bitcoin: Your Ultimate Guide

Pros & Cons Of Shorting Bitcoin

Cryptocurrency is a digital currency designed to work as a medium of exchange over the Internet; Bitcoin is a type of cryptocurrency, and short selling refers to borrowing shares from a broker and immediately selling them to another investor with the expectation that their price will fall soon after. This way, you’re eligible to make a profit. And in crypto long positions, traders assume that the market rate of Bitcoin will increase.

Now that we’ve jogged your memory, let’s discuss how to short bitcoin.

Wondering How to Short Bitcoin? Your Answer Lies Here

How to Short Bitcoin Your Answer Lies Here

1. Margin Trading

Using this method – margin trading – is akin to gambling.
Since you can’t tell whether Bitcoin’s price will go up or down, you should be prepared for both outcomes.

For instance, if Bitcoin’s market rate decreases, you can buy it and return it to the lender, thus making a profit.
On the other hand, if the price increases, you’ll still need to purchase the Bitcoin and return it to the lender, albeit without earning the extra income.

There are plenty of platforms that accept margin trading, namely:

  • FTX
  • Kraken
  • KuCoin
  • Prime XBT
  • Phemex

2. Futures Market

Next up, we have the futures market, which works like a standard futures trade; you purchase a security that comes with a contract. It states the date and price on which you must sell the security.

When it’s time for the contract’s condition to be fulfilled, there’ll be two possibilities:

  • If Bitcoin’s market rate is lower than the price in the agreement, you make a profit.
  • If Bitcoin’s market rate is higher than the price in the agreement, you incur a loss.

Considering the risk associated with the process, the futures market is only recommended for experienced investors.

3. Binary Options Trading

The binary options trading method works similarly to the previous technique, the futures market. However, there’s one significant difference.

In the futures market, you must sell the security or asset at the specified date or price. With binary options trading, you have the right to do so, but there’s no obligation.

If you choose Bitcoin short squeeze using the binary options trading method, you’ll be presented with two options:

  • Call Options to give the holder the right to buy shares. This technique is implemented only if the holder expects Bitcoin’s market rate to increase.
  • Put Options give the holder the right to sell shares. Those who anticipate that Bitcoin’s price will decrease use this technique.

4. Predictions Market

As evident from the name, when you use the predictions market method to short Bitcoins ETF, you place bets on the outcomes of the events.

It’s quite similar to when people bet on horse racing; if the horse they’ve gambled on wins, so do they. Otherwise, they face a loss.

In case you win the bet in the predictions market, the individual who went against you will pay you the wagered amount. But if you lose the wagered amount, you’ll be the one to pay.

Platforms like Augur, WalletInvestor, and Tradingbeasts let you participate in the predictions market.

5. Contracts for Differences (CFDs)

Commonly known as a CFD, a contract for difference is an agreement between a brokerage company and a trader. Instead of using the open market (which typically happens in other methods), the concerned parties settle the difference themselves.

Let’s understand this with the help of an example.

Suppose you buy a Bitcoin using the CFD method. At the time of purchase, its value is $10,000. So, you sign a contract with a brokerage company that states you’ll receive a profit if the price drops to $9,000. Sometime after, when the closing time comes, Bitcoin’s market rate decreases by $1,000. That amount will go into your pocket.

Unfortunately, the Securities and Exchange Commission (SEC) has banned CFD owing to the risks associated with the technique.

Pros & Cons Of Shorting Bitcoin

Pros of Shorting Bitcoin

Advantages of Shorting Bitcoin

1. Accessibility

When people look for investment opportunities, they wish not to be confined by borders. Well, that’s one benefit you’ll receive from Bitcoin short interest. Since you can transfer it from one place to another in a few minutes, you don’t have to be in a specific state to complete the transaction.

2. No Intermediaries

Since the beginning, banks have acted as intermediaries. Without their interference, you can’t complete a transaction. Although that’s not necessarily bad, certain banks charge a transaction fee. Fortunately, no third parties are involved when shorting bitcoin, and you pay only what you have to.

3. 24/7 Transactions

Another significant advantage of shorting Bitcoins is that the marketplace functions 24/7. Whether you follow the Pacific or the Eastern time zone, you won’t have to wait until the morning to invest in the cryptocurrency. On the other hand, regular stock exchanges do not offer this benefit.

Disadvantages of Shorting Bitcoin

1. Complexity

It’ll take you a few weeks, if not months, to wrap your head around the complex cryptocurrency terminologies. In fact, that’s why most people choose to stay away from the concept, thinking it’s not their area of expertise. But this problem has a solution – online resources.

2. High-Risk

Shorting a Bitcoin is practically gambling without truly knowing the outcome. This means there’s a high risk associated with the transaction. If it pays off, you’ll earn a profit; if it doesn’t, your investment will be gone – poof. For that reason, experts recommend you should only short bitcoins if you can afford to lose.

3. Uncertain Future

No doubt, people’s interest in short-sell cryptocurrency is increasing with every passing day. But there’s no way to say how long the popularity will last. Mind you, the concept of cryptocurrency didn’t exist until 2009. Banks and stock exchanges, however, have been around for decades.


Hearing the words short bitcoin strategy ETF and cryptocurrency for the first time will leave you scratching your head. But it doesn’t have to be that way. We provide advice and consultancy for all your cryptocurrency-related questions, strengthening your grasp on the topic.

Can Bitcoin be shorted?

Yes, it’s possible to short every cryptocurrency, including Bitcoin. Although how you do it varies, the premise of every method remains the same: you borrow Bitcoin and hope for its price to decrease.  

Where to short Bitcoin?

There are plenty of platforms that allow you to short Bitcoin, like Kraken and BitMEX.

How to short bitcoin on Coinbase?

Create an account on Coinbase, choose a username, store your recovery phase, learn the fee structure, buy and transfer Bitcoin to your Coinbase Wallet, and use it to purchase 1x Short Bitcoin Token.

How to short bitcoin on Robinhood?

Create a margin account, select a short sale candidate, explain your exit strategy, open a short position, and cover the position.

What are some of the most common ways to short Bitcoin?

The most common methods of shorting Bitcoin include margin trading, futures market, binary options trading, predictions market, and contracts for differences.

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