5 Best Exchanges to Short Crypto- Top Crypto Shorting Platforms
Los Angeles, California --News Direct-- Bitcoin Journal
Cryptocurrency shorting, also known as short selling, has gained popularity among traders recently. In This article, let's explore more about shorting crypto and the five best platforms for shorting cryptocurrencies.
What is Crypto Shorting?
Shorting is a trading strategy to profit from a cryptocurrency's price decline. To short crypto, Traders borrow cryptocurrency and sell it at the current market price, hoping to repurchase it later at a lower price to return to the lender and keep the difference as profit.
Shorting can be done in various ways, including margin trading, futures trading, and perpetual contracts. Among these, perpetual contracts have become increasingly popular for shorting cryptocurrencies due to their unique features.
Crypto Futures Vs. Perpetual
Crypto futures are contracts with a fixed expiry date, after which the contract is settled. Futures contracts are traded in standard contract sizes and have a settlement date in the future. The settlement price is determined based on the underlying asset's price at the expiration date, and the trader either receives or pays the difference between the contract price and the settlement price.
Perpetuals, on the other hand, are similar to futures contracts but do not have a fixed expiration date. Instead, they are designed to track the underlying asset's price continuously, and the contract remains open indefinitely until the trader closes their position with profits or losses realized as the price of the underlying asset moves. Perpetuals are traded with a funding rate periodically paid by one side of the contract to the other, keeping the contract price close to the underlying asset's price.
List of 5 Best Platforms to Short Cryptocurrencies
Covo Finance- Best Decentralized Exchange with Up to 50X leverage
Binance- Largest exchange with advanced features
Kraken- Established platform with margin and futures trading
Bybit- Advanced trading options with up to 100x leverage
Kucoin- Wide range of popular cryptocurrencies
The importance of perpetual contracts in shorting cryptocurrencies is that they provide traders with more flexibility and better risk management. Traders can use leverage to amplify their profits and take larger positions while also having the ability to set stop-loss orders to limit their losses.
Best Platforms to Short Cryptocurrencies:
1. Covo Finance
Covo finance is the best platform for shorting cryptocurrencies due to its user-friendly interface and up to 50X leverage on crypto perpetual. Covo Finance is a decentralized trading platform that allows users to open and close leverage positions on various cryptocurrencies. Unlike other centralized platforms, COVO Finance does not require users to deposit their assets, ensuring traders always have full control of their funds. Additionally, COVO Finance does not charge any price impact fees for trades, allowing users to execute large trades precisely at the market price. These features make COVO Finance an attractive platform for traders seeking a decentralized and low-cost way to trade cryptocurrency with leverage.
To short crypto on Covo finance, traders can select "Long" or "Short," depending on which side they want to open a leverage position on. Long positions earn a profit if the token's price goes up, while short positions earn a profit if the token's price goes down. After selecting the desired side, traders can enter the amount they want to pay and the leverage they want to use.
Covo finance charges a 0.1% trading fee to open and close a position. Additionally, a "Borrow Fee" is deducted at the start of every hour, which is the fee paid to the counterparty of the trade. The hourly fee varies based on utilization and is calculated as (assets borrowed) / (total assets in the pool) * 0.01%.
Managing positions on Covo finance is easy, and traders can view their positions under their Positions list. They can also deposit or withdraw collateral, which allows them to manage their leverage and liquidation price. When depositing collateral into a long position, there is a 0.1% swap fee for converting the asset to its USD value. This fee does not apply to shorts, and withdrawing collateral from longs and shorts does not have this fee.
Covo finance allows traders to close a position partially or entirely by clicking on the "Close" button. For long positions, profits are paid in the asset being longed, while for short positions, profits are paid out in the same stablecoin used to open the position.
Stablecoins or altcoins, such as USDC, DAI, BTC, or ETH, can support the collateral for short positions. If a swap is needed when opening or closing a position, the regular swap fee will apply, 0.1% to 0.5% of the collateral size. Traders can also set stop-loss and take-profit orders by clicking the "Close" button and selecting the "Trigger" tab.
2. Binance
Binance is one of the largest centralized cryptocurrency exchanges in the world, offering traders a range of features, including margin trading and short selling. Binance offers up to 100x leverage for shorting crypto, meaning traders can borrow up to 100 times their initial investment. Binance also offers a variety of trading pairs, including BTC/USDT, ETH/USDT, and LTC/USDT.
Binance is among the best platforms for shorting crypto due to its diverse trading pairs, multi-asset collateral, cooling-off period, and insurance fund. Binance Margin offers various trading pairs, including trading pairs that are not commonly traded and are highly risky due to price manipulation. It also gives traders more options when choosing which crypto to be short. With multi-asset collateral, users can invest multiple assets as collateral to borrow and trade on leverage. This feature allows traders to operate with more flexibility when opening trades.
Binance also offers a cooling-off period function to help users avoid excessive trading and prevent compulsive trading behavior. Additionally, the platform has an insurance fund that protects Binance when users cannot repay debts due to price volatility.
To short crypto on Binance, users can start margin trading by transferring funds into their new Margin Trading Wallet, borrowing the desired amount, trading on the exchange page, and repaying the debt. It's essential to closely monitor the margin level and take necessary actions to avoid automatic liquidation.
The pros of shorting crypto on Binance include a wide range of options and functions that can help make your margin trading journey more responsible and enjoyable. The cons include the risk involved in margin trading and leverage trading, as Binance supports many high-risk assets. It's essential always to be aware of the risks and to use the tool with experience, caution, and purpose.
3. Kraken
Kraken is an excellent platform for shorting crypto, providing traders with extensive features such as 5x leverage for shorting crypto, 24/7 support, and support for over 120 cryptocurrencies.
Kraken provides margin and futures trading for shorting crypto. The platform charges spot fees of 0.16% for makers and 0.26% for takers + up to 0.02% to open a position and up to 0.02% per 4 hours in rollover fees to keep the position open. For margin trading, traders borrow money and pay it back once they close their short position.
However, Kraken also has its limitations, such as not being available in the U.S. and charging higher margin fees than other platforms. Traders who want to short crypto on Kraken can follow the simple steps outlined above. Kraken also offers a variety of trading pairs.
Kraken charges a daily interest rate on borrowed funds, which varies depending on the currency and the amount borrowed. To short crypto on Kraken, traders must deposit funds into their account and then choose the currency they wish to short. Traders can then enter their desired position size and select the leverage they want to use.
4. Bybit
Bybit is a popular trading platform that provides short-selling features for advanced traders. The exchange offers up to 100x leverage, making it an attractive option for those looking to take more significant short positions on cryptocurrencies. Bybit supports many cryptocurrencies, including BTC, ETH, USDT, and X.R.P.
Bybit has relatively low fees, with maker and taker fees of 0.10% each. However, the platform also charges a daily interest rate that fluctuates constantly but is around 0.006% for BTC and 0.009% for ETH. In addition to the high leverage, Bybit offers several different trading options for shorting, such as Inverse perpetual, USDT perpetual, and Inverse futures.
While Bybit is not available in the U.S., it has a monthly trading volume of over $30 billion and is known for its advanced trading features. However, derivatives markets can be complex and challenging to navigate for beginners, making them more suited for experienced traders.
To short crypto on Bybit, traders must deposit funds into their account and select the token they wish to short. Traders can then choose the amount to be short and select the Sell/Short button on the trading interface. Bybit will prompt traders to confirm the trade before opening the short position.
5. Kucoin
Kucoin is a popular cryptocurrency trading platform that offers short-selling features for traders. The platform supports many cryptocurrencies, including BTC, ETH, USDT, and more. Kucoin also provides margin trading, where traders can borrow funds to short cryptocurrencies.
Kucoin charges relatively low fees, with maker and taker fees of 0.10% each for spot trading. However, margin trading fees can be higher, with a 0.1% opening fee and a daily interest rate that varies depending on the cryptocurrency and the amount borrowed.
To short crypto on Kucoin, traders must deposit funds into their account and select the token they wish to short. Traders can then choose the amount to be shorted and select the Sell/Short button on the trading interface. Kucoin will prompt traders to confirm the trade before opening the short position.
While Kucoin is a popular platform, it has its limitations. The shorting platform is only available in some countries, including the U.S. Additionally, Kucoin has faced security issues in the past. However, the platform has taken steps to improve its security measures.
Kucoin is a good option for traders looking to short cryptocurrencies with margin trading. However, traders should be aware of the risks involved in shorting and only use the leverage they can afford to lose.
F.A.Q.
How to Short Cryptocurrencies?
To short crypto using perpetual, you can follow these steps:Step 1: Choose a cryptocurrency exchange platform that offers perpetual contracts
Several cryptocurrency exchange platforms offer perpetual contracts, such as Covo Finance, Binance, BitMEX, and Bybit. Choose the exchange platform that you prefer and create an account or connect your wallet
Step 2: Choose the cryptocurrency and perpetual contract you want to trade
Select the cryptocurrency and perpetual contract you wish to trade. For example, you must select the Bitcoin perpetual contract if you want to short Bitcoin.
Step 3: Place a short sell order
To place a short sell order, select the Bitcoin perpetual contract(BTC-USD) and choose the amount you want to sell. Set the leverage and price to sell the Bitcoin perpetual contract.
Step 4: Monitor your trade
Once you have placed a short sell order, monitor your trade closely. If the price of the Bitcoin perpetual contract falls, you will make a profit. However, if the price rises, you will incur a loss. Set stop-loss orders to limit your losses if the price goes against you.
Step 5: Close your position
When you are ready to close your short position, you must buy back the Bitcoin perpetual contract you sold earlier. If the price of the Bitcoin perpetual contract has fallen, you will make a profit. However, if the price has risen, you will incur a loss.
Which is the best platform to short cryptocurrencies?
Some popular platforms for shorting cryptocurrencies include Covo Finance, Bybit, Kraken, Binance, and KuCoin. It ultimately depends on the trader's individual needs and preferences; Traders should research and compare different platforms before deciding which one to use for shorting cryptocurrencies.
What are factors to consider before shorting crypto?
Before shorting cryptocurrencies, it's essential to consider several factors, such as:
Market conditions: Market conditions can significantly affect the value of cryptocurrencies. News, regulations, and global events can dramatically impact the market. It is essential to analyze the market to determine whether it's a good time to short a particular crypto.
Liquidity: Liquidity is the ease with which an asset can be bought or sold in the market. Before shorting crypto, ensuring enough liquidity to facilitate your trade is essential.
Volatility: Volatility refers to the amount of fluctuation in the crypto price. Highly volatile cryptocurrencies may offer more significant profit potential but carry a higher risk. It's crucial to analyze the volatility of crypto before shorting it.
Fundamentals: It's essential to consider the fundamentals of crypto, such as its underlying technology, adoption rate, and use cases. Cryptos with solid fundamentals may be less likely to experience significant price declines.
Technical analysis: This analysis involves analyzing charts and patterns to identify potential trading opportunities. It's essential to use technical analysis to determine the entry and exit points for your short position.
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