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Author: Admin | 2025-04-27
A way to manage risk. Options are different from futures in that you are not obligated to execute the contract so investors can limit their losses. For example, a popular exchanges to trade bitcoin options is Deribit.5. Shorting Bitcoin With Inverse Exchange-Traded Funds (ETFs)Bitcoin inverse ETFs or short bitcoin ETFs are financial instruments designed to provide returns that are inversely correlated to the performance of bitcoin. This means that if the price of bitcoin falls, the price of the inverse ETF is expected to go up, and vice versa. These ETFs achieve this inverse performance through the use of financial derivatives such as futures contracts, options, and swaps. For example, the ProShares Short Bitcoin Strategy ETF (BITI) is an inverse bitcoin ETF. ➤ Learn more about What Is a Bitcoin ETF6. Shorting Bitcoin With Bitcoin StocksShort selling bitcoin-related stocks or companies with significant exposure to bitcoin is an indirect way to short bitcoin. For example, MicroStrategy, a business intelligence company, has made substantial investments in bitcoin, making its stock price increasingly correlated with the price movements of bitcoin. ➤ Learn more about how much bitcoin MicroStrategy owns and who the top bitcoin holders are in 2024About 17.68% of MicroStrategy’s shares are shorted. Some other bitcoin-related stocks are Marathon Digital Holdings and Riot Platforms Inc. 7. Shorting Bitcoin With Prediction MarketsPrediction markets are markets where you speculate on the outcome of events. Cryptocurrency prediction markets are relatively new, but do present an opportunity to short bitcoin. 8. Shorting Bitcoin With Contracts for Difference (CFDs)A contract for difference (CFD) is a financial product where investors get paid out based on the price difference between open and closing prices. CFDs are similar to bitcoin futures, but have more flexible expiry dates. There are only a handful of brokers that offer CFDs. Shorting bitcoin through CFDs involves opening a contract that will pay the difference between the opening and closing prices if the price of bitcoin falls.Shorting Bitcoin as a HedgeInvestors short bitcoin as part of a hedge in their investment strategy. Due to the often unpredictable nature of the bitcoin market, shorting serves as a strategy for investors to safeguard themselves against potential losses in their other trading positions. For example, a trader who purchases bitcoin in the spot market may choose to short bitcoin via derivatives such as option contracts.The Costs of Shorting BitcoinShorting bitcoin often involves certain costs and fees, which
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