Economy
Financial Experts Have Explained How to Short Crypto on the Market in 2023
Can You Short Cryptocurrencies? – Contrary to popular belief, shorting cryptocurrencies is possible. While short selling is traditionally associated with the stock market, cryptocurrency exchanges now facilitate shorting options. Traders can take advantage of this opportunity by focusing on cryptocurrencies with high liquidity and consistent trading volumes to minimize the risk of price manipulation. Cryptocurrency markets are known for their volatility, making it challenging to predict price movements. However, by employing short-selling techniques, investors can profit from falling prices without owning the underlying assets. In this article, TU experts explore how to short crypto, including the risks involved and the best strategies to implement.
In simple terms, what does it mean to short cryptocurrency?
Shorting cryptocurrency involves borrowing digital currency from a broker and selling it at the current market price. After the cryptocurrency’s value decreases, the trader buys it back and repays the borrowed funds plus interest to the broker. The profit is the margin between the purchase and sale prices of the crypto.
Shorting Cryptocurrency: Different Ways to Do It
There are various options for shorting crypto. Among them, analysts at Traders Union particularly emphasize the following ones:
- Margin Trading: Borrowing funds to enter short positions on cryptocurrency exchanges.
- Short-Selling Bitcoin Assets: Selling Bitcoin with the expectation of buying it back at a lower price.
- Using Bitcoin CFDs: Trading contracts for difference (CFDs) based on the price fluctuations of Bitcoin.
- Futures Market: Engaging in futures contracts that allow investors to short cryptocurrencies.
- Binary Options Trading: Speculating on whether the price of a cryptocurrency will increase or decrease within a predetermined time period.
- Prediction Markets: Participating in platforms that enable users to bet on the outcome of future events.
To discover the main pros and cons of the above options, read the article prepared by TU.
Step-by-Step Guide on How to Short Crypto
Traders Union experts suggest following their Step-by-Step Guide on shorting crypto. Here is a summarized version of the guide:
- Select a reliable cryptocurrency exchange and proceed to register for an account.
- Deposit funds using various methods, including debit/credit cards, bank transfers, or cryptocurrencies.
- Conduct a thorough market analysis to inform your short-selling decisions.
- Select the specific cryptocurrency you wish to short from the derivatives section of the exchange.
- Execute the short position, specifying the desired amount and adhering to risk management principles.
- Maintain a disciplined approach by following your risk management plan throughout the short-selling process.
Risks and Opportunities of Shorting Cryptocurrency
Shorting cryptocurrencies presents both advantages and risks. On the positive side, it allows investors to profit from overvalued assets and hedge against potential market downturns. However, TU analysts note that price volatility and the lack of regulation in the cryptocurrency futures market pose significant risks. Analysts particularly underscore the importance of conducting comprehensive market research and carefully consider these risks before engaging in short-selling activities.
Cryptocurrency Short-Selling Strategies
To maximize the effectiveness of short-selling, experts suggest traders employ the following strategies:
- Technical and Fundamental Analysis: Combine historical price data and trading volume analysis (technical) with an evaluation of a cryptocurrency’s long-term potential (fundamental).
- Diversification: Short a variety of cryptocurrencies to diversify your holdings and mitigate the impact of potential losses.
- Short-Term Shorting: Take short positions for brief periods, known as scalping, to capitalize on quick profits. This strategy requires a high tolerance for risk and a solid understanding of market conditions.
- Caution for Beginners: Shorting cryptocurrencies carries significant risk, making it unsuitable for inexperienced traders. Consider adopting a more conservative approach, such as buying and holding, when starting out.
Conclusion
Short-selling cryptocurrencies can be a lucrative strategy for experienced traders, but it comes with inherent risks. Using borrowed funds amplifies these risks, so Traders Union analysts recommend implementing proper risk management practices, including the use of stop losses. Beginners are advised to exercise caution and gain a thorough understanding of market dynamics before attempting short-selling strategies.
By Adedapo Adesanya
The duo of Geo-Fluids Plc and Afriland Properties Plc propelled the NASD Over-the-Counter (OTC) Securities Exchange up 0.13 per cent on Friday, January 10.
Investors gained N1.4 billion during the trading session after the market capitalisation of the bourse ended at N1.053 trillion compared with the previous day’s N1.052 trillion, and the NASD Unlisted Security Index (NSI) increased at the close of business by 4.07 points to wrap the session at 3,073.93 points compared with 3,069.86 points recorded at the previous session.
Geo-Fluids added 25 Kobo to its value to close at N4.85 per unit compared with the previous session’s N4.60 per unit, and Afriland Properties Plc gained 24 Kobo to close at N16.25 per share versus Thursday’s closing price of N16.01 per share.
There was a 35.4 per cent fall in the volume of securities traded in the session as investors exchanged 4.3 million units compared to 6.6 million units traded in the preceding session, the value of shares traded yesterday went down by 37.4 per cent to N17.2 million from the N27.5 million recorded a day earlier, and the number of deals decreased by 47.2 per cent to 19 deals from the 36 deals recorded in the preceding day.
FrieslandCampina Wamco Nigeria Plc remained the most active stock by value (year-to-date) with 1.9 million units worth N74.2 million, followed by 11 Plc with 12,963 units valued at N3.2 million, and Industrial and General Insurance (IGI )Plc with 10.7 million units sold for N2.1 million.
IGI Plc closed the day as the most active stock by volume (year-to-date) with 10.6 million units sold for N2.1 million, trailed by FrieslandCampina Wamco Nigeria Plc with 1.9 million units valued at N74.2 million, and Acorn Petroleum Plc with 1.2 million units worth N1.9 million.
By Adedapo Adesanya
The Naira witnessed a depreciation on the US Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Friday, January 10.
According to data from the FMDQ Exchange, the local currency weakened against the greenback yesterday by 0.12 per cent or N1.80 to sell for N1,543.03/$1 compared with the preceding day’s N1,541.23/$1.
The pressure on the domestic currency came as the access granted to the Bureaux de Change (BDC) operators by the Central Bank of Nigeria (CBN) to purchase FX from the official market through the Electronic Foreign Exchange Matching System (EFEMS) platform prepares to end next week, precisely on January 19.
The CBN had given a 42-day window to the operators to access the platform to help stabilise the Naira in December, and this expires next week.
On Friday, the Nigerian currency tumbled against the Pound Sterling in the official market by N30.78 to sell for N1,889.29/£1 compared with the previous day’s N1,858.51/£1, but gained N5.48 against the Euro to finish at N1,583.81/€1, in contrast to Thursday’s rate of N1,589.29/€1.
As for the parallel market, the Nigerian Naira remained stable against the US Dollar during the trading session at N1,650/$1, according to data obtained by Business Post.
In the cryptocurrency market, it was bearish as the US economy added 256,000 jobs last month, the Bureau of Labor Statistics reported on Friday, topping forecasts for 160,000 and up from 212,000 in November (revised from an originally reported 227,000).
However, the readings came after a number of recent economic reports triggered a broad-market pullback across asset classes such as crypto as investors quickly scaled back the idea of a continued series of Federal Reserve rate cuts in 2025.
Cardano (ADA) fell by 3.6 per cent to trade at $0.921, Solana (SOL) slumped by 2.8 per cent to $185.93, Ethereum (ETH) depreciated by 1.4 per cent to $3,233.27, Litecoin (LTC) lost 1.3 per cent to finish at $103.62, Dogecoin (DOGE) shed 0.5 per cent to sell at $0.3315, Bitcoin (BTC), waned by 0.2 per cent to $94,154.43, and Binance Coin (BNB) went south by 0.1 per cent to $693.30.
On the flip side, Ripple (XRP) jumped by 1.5 per cent to settle at $2.34, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) sold flat at $1.00 each.
By Dipo Olowookere
Profit-takers took control of Customs Street on Friday, plunging it by 0.08 per cent at the close of trading activities.
The sell-offs were across all the key sectors of the Nigerian Exchange (NGX) Limited on last trading session of the week.
The insurance space went down by 1.53 per cent, the banking index depreciated by 0.41 per cent, the consumer goods sector weakened by 0.16 per cent, and the energy counter slumped by 0.08 per cent, while the industrial goods sector closed flat.
At the close of business, the All-Share Index (ASI) tumbled by 79.68 points to 105,451.06 points from 105,530.74 points and the market capitalisation retreated by N48 billion to N64.303 trillion from N64.351 trillion.
Yesterday, investors traded 1.5 billion shares worth N19.4 billion in 12,877 deals compared with the 489.5 million shares worth N13.1 billion transacted in 13,010 deals in the preceding day, indicating a decline in the number of deals by 1.02 deals and a rise in the trading volume and value by 203.14 per cent and 48.09 per cent, respectively.
Wema Bank was the busiest stock with 976.2 million units valued at N9.8 billion, Tantalizers traded 53.0 million units worth 129.6 million, Universal Insurance sold 34.8 million units for N26.8 million, Access Holdings exchanged 33.9 million units valued at N843.8 million, and Nigerian Breweries traded 27.3 million units worth N873.3 million.
The heaviest loss was suffered by Sunu Assurances with a decline of 9.99 per cent to trade at N7.30, Eunisell shed 9.96 per cent to N17.35, SAHCO crumbled by 9.87 per cent to N30.15, DAAR Communications plunged by 9.28 per cent to 88 Kobo, and Sovereign Trust Insurance went down by 7.04 per cent to N1.32.
On the flip side, C&I Leasing gained 10.00 per cent to close at N4.51, Honeywell Flour appreciated by 9.99 per cent to N10.02, Trans Nationwide Express jumped by 9.89 per cent to N2.00, RT Briscoe rose by 9.83 per cent to N2.57, and Secure Electronic Technology grew by 9.46 per cent to 81 Kobo.
Business Post reports that the bourse ended with 33 price gainers and 25 price losers, indicating a positive market breadth index and strong investor sentiment.
-
Feature/OPED5 years agoDavos was Different this year
-
Travel/Tourism8 years ago
Lagos Seals Western Lodge Hotel In Ikorodu
-
Showbiz2 years agoEstranged Lover Releases Videos of Empress Njamah Bathing
-
Banking7 years agoSort Codes of GTBank Branches in Nigeria
-
Economy2 years agoSubsidy Removal: CNG at N130 Per Litre Cheaper Than Petrol—IPMAN
-
Banking2 years agoFirst Bank Announces Planned Downtime
-
Sports2 years agoHighest Paid Nigerian Footballer – How Much Do Nigerian Footballers Earn
-
Technology4 years agoHow To Link Your MTN, Airtel, Glo, 9mobile Lines to NIN