The ability to short crypto has always been very important in the industry. Whether you’re looking for the best exchange to short Bitcoin or the best crypto exchange for shorting a variety of digital assets, this guide has got you covered.
We delve into the features and offerings of top exchanges like Bybit, Phemex, KuCoin Futures, Margex, and BitFinex, providing you with a comprehensive understanding of their shorting capabilities.
But the question remains, can you short crypto? The answer is a resounding yes, and this guide will show you how. From understanding the basics of shorting to exploring the best platforms for such trades, we’ve got all the information you need to navigate the exciting world of crypto shorting. So, if you’re ready to dive in, read on.
What you'll learn 👉
5 Best Crypto Exchanges That Allow Shorting
| 📝 Crypto Exchange | 📊 Summary |
|---|---|
| 💼 Bybit | A global crypto derivatives exchange that offers spot trading, margin trading, and futures trading. It provides up to 100x leverage and supports both long and short positions. |
| 🌐 Phemex | A fully regulated money transfer service that offers both spot and margin trading in various cryptos. It provides up to 100x leverage and supports trading long and short on all major currency pairs. |
| 🚀 KuCoin Futures | Offers advanced crypto trading options named KuCoin Futures. It allows traders to take both long and short positions and provides up to 100x leverage. |
| 🛡️ Margex | A crypto trading platform that offers high levels of security, proprietary software against price manipulations, and up to 100x leverage. It supports short selling and requires no KYC verification. |
| 🏦 BitFinex | One of the oldest places to trade crypto, it offers different order types, margin trading, and OTC trading. It allows for shorting of cryptos and provides up to 100x leverage. |
Bybit- Best Exchange To Short Bitcoin
Bybit is a global crypto derivatives exchange headquartered in Singapore. It provides a range of products, such as spot trading, margin trading, and futures trading.
It requires no KYC, has a large insurance fund, offers rebates to market makers, charges low on funding fees, and most importantly, it has solid liquidity.
The exchange offers leveraged positions up to 100x leverage. Leverage refers to the amount of money a trader needs to deposit in order to open a position.
On Bybit, you can trade both long and short positions, meaning you can bet on an increase or decrease in the value of a certain coin.
ByBit is popular as the place where the plebs, aka the ‘dumb money’, trade on leverage. Learn how to short or long crypto on ByBit by clicking here.
Phemex
Crypto trading platform Phemex is also situated in Singapore. Under Singapore’s MSB regulations, it is a fully regulated money transfer service. It is backed by some of the world’s most prestigious financial and technological institutions. The company’s founders include former Morgan Stanley employees, entrepreneurs, and investors.
The exchange enables both spot and margin trading in cryptos, such as Bitcoin, Ethereum, Litecoin, Stellar Lumens, EOS, Tron, OMG, Qtum, Waves, etc.
Phemex has the highest possible leverage, up to 100x. Trading long and short on all major currency pairs is supported.
It is among the industry’s fastest exchanges in terms of order execution. Processing orders takes milliseconds and can handle more than 300,000 per second.
Phemex also requires no KYC for traders that make crypto-only trades. If you want to purchase crypto for fiat, you must do an identity check.
Also, they offer a unique feature – a Phemex premium account, where you pay a fixed monthly fee for the premium account and get to trade for free. This is great for large volume traders.
Btw. if you are from the US, it is much harder to find a crypto platform that will let you trade with leverage so we compiled a list of crypto exchanges that do allow leveraged trading for Americans.
KuCoin Futures
KuCoin is a Seychelles-based crypto exchange platform that was established in 2017. It offers advanced crypto trading options named KuCoin Futures.
Trading futures contracts, as opposed to spot markets, allows traders to take both long and short positions. Because an underlying asset is not purchased directly, shorting it is significantly simpler. Traders can also use borrowed money to boost the size of their positions.
Leveraged trading is offered. Normal assets can have 1x to 20x leverage. BTC and ETH can be increased to 100x.
Bitcoin (BTC), Ethereum (ETH), or Tether (USDT) are used to calculate profit and loss (USDT). The long or short position can be closed at any time by the user.
Margex
Margex is a Seychelles-based crypto trading platform that was established in 2020.
High levels of security, proprietary software against price manipulations, a referral program, up to 100x leverage, short selling, and no KYC verification are some of the primary characteristics of Margex.
There is a restricted selection of trading pairs available on this site. Traders can only choose from eight different currency pairs, and those are BTC/USD, ETH/USD, XRP/USD, LTC/USD, EOS/USD, ADA/USD, SOL/USD, and UNI/USD.
Margex attempts to entice merchants by offering one of the lowest rates in the industry. Fees are calculated using a producer/download approach.
BitFinex
The British Virgin Islands are home to Bitfinex, which was started in 2012. It makes it one of the oldest places to trade crypto. This exchange was made for professional and institutional traders, and it has some of the highest BTC/USDT volume in the business. This is partly because it gives traders 100x leverage.
It offers different order types, margin trading, and OTC trading, making it an excellent choice for experienced traders who want to trade at lower costs.
It is one of a handful of exchanges that allow for shorting of cryptos, leverage trading strategies, and has an app that lets traders track their portfolios.
BitFinex is the place where the real OGs (original gangsters) and whales love to trade.
How To Short Cryptocurrency – most common ways
Short selling is one of the oldest strategies used by traders. In fact, it dates back to the 1600s. Traders would borrow stocks or commodities from brokers and sell them immediately, only to buy them later at a lower price. This strategy works well because you are betting against the market, not the individual shares or assets.
The problem with shorting cryptos is that there are a lot of manipulations involved, from the exchanges themselves and also from the whales – big traders and insiders who play market sentiment to their advantage.
There are many ways to short Bitcoin or other assets. Some include:
Prediction Markets
Crypto prediction markets are like regular ones. Investors can construct events to make bets. As a result, you may be able to forecast that Bitcoin will decrease by a particular percentage and if someone bets against you, you will win when it does.
Binary Options
Bitcoin can be shorted using call and put options. To short the currency, place a put order with an escrow service. You’d seek to sell the currency at today’s price, even if it lowers.
Unlike futures trading, binary options trading allows you to only lose the amount of money that you paid for the option.
Margin Trading
People are able to borrow money from their brokers in order to participate in margin trading, which enables them to make purchases. It is essential to keep in mind that using margin requires leverage, which is the borrowing of money, and that this can either magnify gains or exacerbate losses.
Futures Market
Counterparties (buyers and sellers) on the Bitcoin futures market can enter into settlement contracts where they commit to acquiring or selling bitcoins at a specific date and at a specified price. They must adhere to the conditions of their contracts and pay their bills on time.
A trader wishing to short Bitcoin will sell the futures contract and agree to sell BTC at a specified price. If they expect Bitcoin to go below that level, they’ll buy it in the market on the settlement day and sell it for more. If they’re wrong, they’ll have to buy BTC at market pricing, which is more than the settlement price, making a loss.
If the trader believes BTC will rise over the settlement price, they can also buy the contract. If so, they’ll buy the asset at a discount; if wrong, they’ll pay more.
Using Bitcoin CFDs
A bet on the movement of an asset’s price is known as a contract for difference (CFD). Rather than purchasing or selling the actual asset, you sign an agreement to compare the market price of Bitcoin with that of the CFD on a particular date.
If it’s more, you pay the difference. If the price is cheaper, you get the difference.
Conclusion
Shorting Bitcoin or another crypto is risky because you’re using borrowed Bitcoins. In the event of a strong Bitcoin price spike, the exchange may seek further margin money or liquidate your position if it falls below the maintenance margin amount.
We urge you to be vigilant when shorting and always use a stop loss. Shorting Bitcoins is especially risky for beginners, and we would definitely advise against that if you are new to trading.
Remember that if you want to practice shorting before investing in the live market, you can use some demo trading platforms to practice without risking any actual money.
FAQs
The coin creators who get their extremely large number of coins for free seems to be at an advantage. When the price spikes they can sell and wait for the pump to run out f stem and when the coin collapses can buy back for a small fraction of what they sold for?