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Going Short

The practice of selling cryptocurrency that is not currently owned (usually borrowed), and subsequently repurchasing them (“covering”). In the event of an interim price decline, the short seller profits, since the cost of (re)purchase is less than the proceeds received upon the initial (short) sale. Conversely, the short position closes out at a loss if the price of a shorted instrument rises prior to repurchase.

While going long is most usually done by market bulls, the practice of going short isn’t necessarily confined to market bears. It is possible for a bull to go short an asset during a pullback or correction in price, simply to make a profit. In fact, much short selling is done simply on speculation and for a quick profit, not because the short seller expects price to continue going lower.

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