Shorting Bitcoin (Exchange-traded-funds) ETFs is a process of making a profit by selling Bitcoin ETFs during bear markets. The cryptocurrency market is highly volatile for now, but there are several ways to short Bitcoin ETFs using derivatives such as futures and margin trading, which help to make the most of red markets. Shorting is highly risky but yields wholesome profits.
1. Margin Trading
For traders who fear the collapse of Bitcoin prices in the future because of the highly volatile crypto market, margin trading is the way to go. Margin trading involves using leverages, which is borrowing money from broker sites for trading. Many crypto sites and exchanges such as Binance allow for margin trading, a suitable process for shorting Bitcoin ETFs.
2. Binary Options for Trading
Binary trading involves using a 1 and 0 option when trading Bitcoin ETFs. This is not the literal one and zero but are short options that enable traders to short Bitcoin ETFs. In short, you will select the put option using an escrow service.
The put order will execute when the price falls to the option you selected, and you will sell your ETFs. The choice is precarious but good for shorting Bitcoin ETFs because you can minimize loss by choosing not to sell your put options as a trader. This limits your losses to the price you paid for the put options. Several offshore exchanges such as Deribit allow for Binary options trading.
3. Market Prediction
Market prediction in crypto markets occurs in the same manner as real-world markets. In market prediction, investors create an event following an outcome to make a wager. It, therefore, becomes easy for a trader to predict the price changes of Bitcoin. Following the correct price prediction as an investor, you make a profit off of Bitcoin.
4. Contract for Differences (CFDs)
CFDs are a shorting strategy that uses price differences of the opening and closing Bitcoin prices. They are like futures because they depend on the fluctuations in the price of Bitcoin. The only differences are that CFDs have predetermined a more flexible tenure and predetermined settlement dates. CFDs also do not need physical delivery of BTC ETFs. You can enter into specific CFD contracts based on Bitcoin’s performance relative to other cryptocurrencies or fiat as a trader.
5. Short-Selling
The cryptocurrency market is evolving, and new technologies emerge on top of Bitcoin every day. Bitcoin ETFs are examples of BTC assets. This method is risky but profitable. As an investor, you purchase Bitcoin ETFs when the price is low, hold for some time, and sell when it gains value. The method is risky because sometimes the bear markets last for months, like this year. There are also exchanges and wallet fees.
Ways to Short BTC ETFs Summary
As a trader, Bitcoin ETFs are promising. However, you have to consider several factors such as the volatility of BTC, the regulatory status of Bitcoin ETFs is still unclear, and the knowledge of order types. As a trader, it is good to have basic technical knowledge on trading because shorting is a risky process that also yields profit when you apply technical knowledge.