Crypto markets are wild. Prices can skyrocket one day and nosedive the next. While most traders focus on going long (betting on price increases), real pros know how to make money in both directions. That’s where shorting comes in.

Shorting allows you to profit when crypto prices drop. And lately, we’ve seen bearish action in the market—not because of a typical bear market, but because of a battle between financial giants.

The traditional elites who have thrived in the old financial system don’t want the new economic paradigm—one that crypto represents—to succeed.

They love to see prices fall–and are not above manipulating markets to gain a better entry price. They want to be the dominant force in crypto.

Retail traders often react emotionally to market movements. Feeling, not logic, dominates short-term trading.

Understanding this irrationality gives you an edge.

Whether the market is up or down, having a shorting strategy in your toolkit allows you to turn volatility into opportunity. But beware—shorting comes with risks, and you alone are responsible for your financial choices.

What is Shorting?

Shorting is a trading strategy where you bet against an asset’s price. Instead of buying low and selling high, you sell high first and buy low later, pocketing the difference.

You can even get PAID to short (as I’ll explain in a second).

The simplest way to “short” an asset is to swap it for a stablecoin like USDT or even another asset class you believe in (stocks, bonds, gold, etc.).

If you think Bitcoin is going to fall, converting it into USDT protects your capital.

Later, when the price drops, you can buy back more Bitcoin with the same USDT—effectively increasing your holdings. This is the most basic form of shorting.

For those looking for more advanced strategies, there are multiple ways to short crypto using leverage and derivatives.

Why Short Crypto?

You don’t have to be a crypto bear to use shorting as a strategy. Sophisticated traders use shorting for multiple reasons.

First, it can serve as a hedge against losses. When the market is trending downward, shorting allows you to protect your portfolio rather than watch it bleed.

Second, it enables you to profit from crashes. Instead of panicking when prices fall, you can capitalize on the downturn by making strategic trades.

Lastly, shorting is an essential tool for traders who aim to profit in any market condition. True pros make money whether the market is going up or down, and mastering shorting can help you trade like them.

How to Short Crypto

There are several ways to short crypto, each with its own risks and benefits. From margin trading to futures and decentralized finance (DeFi) platforms, traders have many options to bet against crypto prices. Below are some of the most popular methods used by professional traders.

Margin Trading (Borrow & Sell)

Margin trading is one of the most common ways to short crypto. It involves borrowing assets from an exchange, selling them at the current market price, and then repurchasing them later at a lower price to return the loan.

For example, if you borrow 1 BTC at $85,000 and sell it immediately, then buy it back at $80,000, you keep the $5,000 difference as profit (minus fees).

Platforms like Binance, Kraken, and Bybit offer margin trading, but be cautious—using leverage amplifies both gains and losses.

Futures Trading

Futures contracts allow traders to speculate on the future price of crypto assets. By opening a short position in a futures contract, you profit if the price declines. If Bitcoin is currently trading at $85,000 and you enter a short futures contract, a drop to $80,000 results in a profit. Futures trading often involves leverage, meaning you can control a larger position with less capital, but this also increases risk—one wrong move can liquidate your position quickly, and you’ll owe every penny (or Satoshi) you borrowed.

Popular platforms for trading crypto futures include Binance Futures, Bybit, and Deribit. These exchanges offer different leverage options and trading pairs, allowing traders to customize their short positions based on risk tolerance and market outlook.

Perpetual Swaps (No Expiry Shorts)

Perpetual swaps work similarly to futures but have no expiration date, allowing traders to hold short positions indefinitely. This makes them popular among advanced traders who want to capitalize on long-term price declines.

However, perpetual swaps involve funding fees, where traders on one side of the trade pay the other, which can add up over time and reduce profits.

Platforms like Binance, Bybit, and OKX provide perpetual swap contracts with various leverage options.

Each platform has different fee structures and liquidity levels, so traders should compare before selecting where to execute their trades.

Options Trading (Put Options)

Options trading is another way to short crypto.

A put option gives you the right (but not the obligation) to sell an asset at a predetermined price. If you buy a put option for Bitcoin at $85,000 and the price drops to $80,000, your option gains value, allowing you to sell it at a profit.

Options trading is more complex than other shorting methods but offers a strategic way to manage risk and potential gains.

Crypto options trading is available on platforms like Deribit, LedgerX, and Binance Options. These platforms allow traders to customize strike prices and expiration dates, offering flexibility in their shorting strategies.

DeFi Shorting (Borrow & Sell in DeFi Markets)

Decentralized finance (DeFi) platforms like Aave and Compound provide a way to short crypto without relying on centralized exchanges.

In DeFi shorting, traders borrow crypto assets, sell them, and repurchase them at a lower price before returning the loan.

This method allows for greater privacy and control but comes with risks like smart contract vulnerabilities and fluctuating interest rates.

The Hidden Risks of Shorting

Shorting crypto can be highly profitable, but it comes with substantial risks that traders must be aware of.

Unlike simply holding crypto, where your maximum loss is limited to your initial investment, shorting has the potential for unlimited losses if the market moves against you.

Understanding these risks is essential for managing your positions effectively.

  • Unlimited Loss Potential – Unlike buying crypto (where losses are capped), a short squeeze can wipe you out.
  • High Leverage Dangers – 100x leverage sounds great—until a small price move liquidates you.
  • Exchange Risk – Some platforms manipulate price movements or have liquidity issues.
  • Funding Fees – Perpetual contracts charge ongoing fees that add up.

The Bigger Picture: Market Manipulation & Emotional Trading

Understanding the broader market dynamics is crucial when shorting crypto.

Many believe we are not in a traditional bear market but rather witnessing a strategic battle between financial elites who want to control or suppress the crypto space.

These powerful institutions often manipulate prices to shake out retail investors and secure better entry points for themselves.

The best traders recognize these tactics and use them to their advantage. Staying level-headed and focusing on long-term strategies is essential for success.

Trade Smart, Trade Safe

Shorting is powerful but comes with risks. Manage your leverage and set stop losses. Swapping into stablecoins is the simplest way to hedge against market drops. 

Do your own research and take responsibility for your trades. The market is irrational today, but in the long run, logic and fundamentals win.

By adding shorting strategies to your trading toolkit, you’re no longer at the mercy of the market. Whether prices are soaring or crashing, you’re in control. Just be cautious, trade smart, and always have a plan.

MichaelHeadshot
Michael Hearne

I’m a serial entrepreneur, and I’ve spent the last 15 years taking companies to new levels, breaking the boundaries of innovation, and triumphing over adversity. My wife, Victoria, and I started our first business in a 2-bed/1-bath apartment with 4 kids, next to a crackhouse. We pushed through setbacks and failures to lift our family out of poverty. Along the way, I’ve learned that my struggles make me stronger. And that being the best version of me is the greatest contribution I can give to the world. It makes me a better husband, and father. It improves my health, energy, and my capacity to serve others. And it has allowed me to build businesses that make the world a better place. Today, I work for passion, to make a difference, and solve real problems in the real world through my business ventures. This little site is where I share the things I’ve learned, and am still learning, on my journey.