Some of you may remember the 2015 Oscar-winning film The Big Short. This movie, an adaption of Michael Lewis’ book follows a few key American individuals who not only predicted the 2007-2008 housing collapse but ultimately profited from it. They did this using a strategy called “shorting” and while in this particular example, it was unethical and risky, shorting can actually be a highly effective strategy for crypto trading. Using YouHodler’s Multi HODL tool, shorting crypto is an efficient way to borrow crypto, sell it, and make a profit.
Despite what you see in the news and on social media, short selling is not always a pessimistic strategy for crypto trading. Sure, there are a few choice individuals who pray for the demise of the entire crypto market just so their short positions make them rich but we don’t support that behavior. Furthermore, there are far less risky ways to profit from short-selling like on YouHodler for example. Before we dive too deep on this strategy for crypto trading, let’s first explain in simple terms what shorting actually does.
On the stock market, “shorting” a stock happens when an investor borrows shares of a company from a stockbroker or owner. Then, the investor sells that stock at the current market price. There is a contract that the shares will be replaced at some point in the future (ideally at a lower price for the investor). Hence, shorting the market is done with the hope that the prices will decline in the future so the investor can pay back the loan, and keep the leftover profit. Now, let’s apply this example to Multi HODL.
When one clicks the “DOWN” button on Multi HODL, they are effectively opening a short position on the crypto of their choice (e.g. Bitcoin). In this situation, the user borrows Bitcoin from YouHodler to sell at market price. If the price of Bitcoin then goes down, the user profits because they can buy the same amount of Bitcoin to pay back the loan a lower price and keep all the profits. If it goes up, they lose money. Of course, the user is not doing this manually like one would on a margin trading platform. It’s all done behind the scenes, automatically via our Multi HODL tool.
Some people see short selling as a controversial instrument because for some people, it means they are betting on the demise of Bitcoin for example. However, that is not the case. All markets have natural ebbs and flows. Bitcoin does not only go up. Regardless of a bull or bear market, Bitcoin will have up days and down days. Shorting is simply a way to take advantage of the opportunities when an asset like Bitcoin goes down. Besides the obvious benefit of profiting from a successful short position on Multi HODL, there are several additional pros.
Using Multi HODL to open a short position has a wide variety of benefits for many crypto traders of all skill sets. For example:
Short selling is a well known, popular, and as we just discussed, profitable strategy for crypto trading. With over 14 crypto options on the platform, you have multiple chances to short the market and profit every single day. Short selling on YouHodler comes with competitive fees, management tools to help you better monitor your position and a friendly user interface for traders of all levels.
So don’t just HODL and watch your profits decrease. Take advantage of every single drop in the market in a short position. Perhaps one day, you’ll even have a “Big Short” story of your own to tell someday.