Can you explain the meaning of 'short' in the world of cryptocurrency?

1 answers

• Jan 07, 2022 · 3 years ago
  Shorting in the world of cryptocurrency is a trading strategy where an investor sells a cryptocurrency that they do not own, with the expectation that its price will decrease. This can be done by borrowing the cryptocurrency from a third party and selling it at the current market price. If the price does indeed drop, the investor can buy back the cryptocurrency at a lower price, return it to the lender, and profit from the price difference. However, if the price increases, the investor will have to buy back the cryptocurrency at a higher price, resulting in a loss. Shorting can be a risky strategy, as the potential losses are unlimited if the price keeps rising. It is important to note that shorting is not available on all cryptocurrency exchanges, and traders should carefully consider the risks and limitations before engaging in shorting activities.
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