Dangers of Shorting Bitcoin

May 9, 2018 by Adrian Thorpe

Shorting BitocinHaving seen the value of Bitcoin shoot up in value, but then inevitably drop down in value not long after its price spiked several times in the past, there are now more and more people who are looking to short Bitcoin, and take advantage of when its value does plunge.

That will simply entail an investor pairing up Bitcoin with any other fiat currency or even one of the many different cryptocurrency and then choose a date in the future when they think Bitcoin will drop in value against the currency they have paid it up with.

By far and away the easiest way that an investor or for that matter anybody is going to be able to short Bitcoin is by making use of something known as a Forex Broking trading platform, and there are several such Forex Brokers offering their service online or to anyone who downloads their trading app.

The way those platforms work however is that you are simply betting on 50/50 outcome as to whether Bitcoin will fall in value over a given period, so run the risk of losing the value of the stake you place on such a bet.

Whilst there is a 50/50 chance of Bitcoin falling in value or rising in value, you will never get even money odds on it swinging in either direction, and as such the odds you will be offered are not true odds but slightly less than true odds to ensure that the Forex Broker can make a profit on his platform and betting book!

Bitcoin is Very Volatile

Shorting Bitcoin or even placing a bet on its value rising is something you may be tempted to do. However, it is of course impossible to know in advance in what direction it is going to move, and with there being such a huge market capital value on Bitcoin it is not a cryptocurrency that can have its value manipulated by third parties.

Therefore, it is going to be up to you whether you do decide to place a bet on the value of Bitcoin, but you really are going to be losing out by using a Forex Broker as the odds they will offer you are going to be very low, irrespective of whether you place a bet on Bitcoins value rising or falling.

It you do want to try, and benefit from the volatility of Bitcoin then it may be best of you to buying into it, ideally when the price has dipped in value, and then hold onto your Bitcoin and cross your fingers that its value will start to increase again.

I am of the mind that Bitcoin is always going to be on a rollercoaster type of rise in the very near future regarding its value, but it may be a cryptocurrency to consider buying into as a long-term investment rather than a short term one, but that is always going to be something you must weigh up the risks of!

No Risk No Gain

You are never going to be able to make financial gains on Bitcoin if you do not choose to invest in it, and as such that is something that you will need to do, but buying Bitcoin really is easy these days.

One way that has become popular is by making use of a Bitcoin ATM, for when you do so you can use banknotes that you simply need to feed into that machine and in exchange it will then give you Bitcoin! However, the costs of using a Bitcoin ATM are quite excessive, but to be fair so are the fees and charges imposed on you when you use a digital currency exchange too!

If you want a relatively cost-effective way to buy Bitcoin then find out if anyone you know, and trust uses that cryptocurrency and is prepared to sell you some, for that way you can pay them on the spot for it and they can then send your Bitcoin to you directly into your Bitcoin digital wallet.

By using a peer to peer type of transfer you will then not be faced with having to pay all the additional fees and charges that both Bitcoin ATMs and digital currency exchanges have become infamous for imposing on their users, but you will need to get a digital wallet if you have never bought into Bitcoin before as that is how you can then access your bitcoin on the blockchain.