Short

Going short means opening a trade that profits when an asset's price falls, the mirror image of a normal "long" purchase. Rather than buying and hoping the price rises, a short seller borrows the asset, sells it immediately at the current price, and aims to repurchase it later at a lower price to return to the lender, pocketing the difference minus fees and interest.

In crypto, few traders actually borrow and sell coins directly. Most shorts are opened through derivatives on an exchange: margin trading, dated futures contracts, or perpetual futures that never expire and use periodic funding payments to keep their price tied to the spot market. These instruments let traders open a short position with leverage, meaning a relatively small deposit controls a much larger position size.

Leverage is what makes shorting so dangerous. It multiplies both gains and losses, and if the price moves against the trade, the exchange can force-close the position through liquidation once losses eat through the posted collateral. A sudden rally can also trigger a "short squeeze," where forced buybacks from liquidated shorts push the price up even further, accelerating losses across the market. Because of this asymmetric risk, shorting is most common on highly liquid assets like Bitcoin and is generally reserved for experienced traders using strict stop-losses and disciplined position sizing rather than casual investors.