What is Short Bitcoin: How to perform futures selling transactions in the cryptocurrency market

Bitcoin over the past decade has demonstrated its superior strength with large price swings compared to traditional assets. However, these long-term rallies never occur without sharp declines, corrections, and downward price phases. Most cryptocurrency traders are familiar with the buy-and-hold strategy for BTC (long), but few understand the opposite mechanism – short selling (short). When the market goes down, experienced traders can take advantage of this by selling BTC at high prices and buying back at lower prices to generate profit. This article will guide you to understand what a long short order is, how it works, potential risks, and how to apply this strategy on modern trading platforms.

What is a long short order: Basic concepts

To understand short-selling Bitcoin, first distinguish between two concepts: what is a long short order in the context of cryptocurrency trading.

Long (buy) order is when a trader predicts the price will rise. They buy the asset and hope to sell it at a higher price. Their profit has no theoretical limit, but losses are limited to the initial investment.

Short (sell) order is when a trader predicts the price will fall. They borrow the asset from the platform, sell immediately at the current market price, and buy back at a lower price to repay. This creates a complete reversal of the long strategy – profits are limited, but losses can be unlimited.

The popular phrase “buy low, sell high” refers to a long position. Conversely, when short-selling, traders perform “sell high, buy low” – selling before owning, then buying later to settle the debt.

How short Bitcoin orders work

When a trader decides to short BTC on a trading platform, the steps occur in the following order:

Step 1: Borrow the asset – The platform allows traders to borrow BTC from available sources (possibly from other traders or the platform’s reserve).

Step 2: Sell immediately – BTC is sold at the current market price, and cash is credited to the account.

Step 3: Wait – The trader waits for BTC price to decrease.

Step 4: Buy back (cover short) – When the price has dropped sufficiently, the trader buys back the equivalent amount of BTC.

Step 5: Repay – BTC is returned to the platform, and the difference between the initial sale price and the buy-back price is the trader’s profit.

Real-world example: Suppose you short 0.5 BTC when the price is $96,390 (based on current data). After a few days, the price drops to $92,000. You buy back 0.5 BTC at this level. Your profit will be: (0.5 × $96,390) - (0.5 × $92,000) = $2,195, minus transaction fees.

When is the right time to short Bitcoin

The short-sell BTC strategy works best in specific situations:

Strong market decline: In 2022, BTC dropped 65%. That’s an ideal opportunity for traders who follow bearish strategies.

Unusual bullish market: Even in a rising market, experienced traders can use technical analysis to identify temporary correction points and profit from pullbacks.

Technical analysis: By studying past price patterns, traders can predict when prices are more likely to decrease than increase.

However, technical analysis is not an exact science. Cautious traders always apply strict risk management, including setting stop-loss and limit orders at reasonable reward-to-risk ratios.

Comparing risks: Long vs Short

When executing a spot long order (spot), the trader can only lose the amount they invested. If you buy 0.1 BTC at $96,390 and the price drops to $0, the maximum loss is $9,639. However, the profit potential of a long position is unlimited – if Bitcoin becomes a global reserve asset at a price $1 million(, profits will correspond.

In contrast, shorting BTC involves a completely reversed situation:

• Maximum profit: Limited to 100% of the initial position )when the price drops close to $0###.
• Potential loss: Theoretically unlimited. If you short 0.1 BTC at $96,390 and the price rises to $200,000, your loss will be $10,361 – exceeding your initial capital.

This is why short-selling is considered a more advanced trading strategy with higher risks. If you short without a stop-loss mechanism, a sudden price increase can wipe out your account.

Advanced tools for short trading

Margin trading and leverage

Margin trading allows traders to use borrowed funds to expand their position size. If you have $1,000 and want to short with 5x leverage, you can short assets worth $5,000, while only risking $1,000 of your own money.

This mechanism:

• Amplifies both profits and losses
• A sudden price change can lead to forced liquidation
• Is not suitable for beginners due to high risk

( Futures contracts )Futures###

Allow traders to bet on BTC price at a future expiration date. They can go long or short, and use leverage.

( Options )Options(

Grant the right )not obligation### for traders to buy or sell BTC at a predetermined price at expiration. They offer greater flexibility but are more complex than futures.

( Perpetual swaps )Perpetual Swaps(

Have no expiration date, allowing long/short trading with leverage over an indefinite period. They require periodic payments )funding fees### between profitable and unprofitable positions.

How to execute a short BTC trade

To short Bitcoin on modern trading platforms, follow these steps:

Step 1: Choose trading pair

Access the trading section on the platform and select BTC/USDT or other stablecoin pairs.

Step 2: Select product

Decide which product to use – margin trading, perpetual swaps, futures, or options – depending on your goals and risk appetite.

( Step 3: Enter trade details

• Choose order type: limit )limit(, market )market(, or stop-loss )stop-loss(
• Enter desired short price
• Select leverage )1x if you do not want to use leverage###
• Specify the amount of BTC to short

Step 4: Confirm and execute

Carefully review all information and press “Open Short” or equivalent. The order will appear in the pending orders list.

Step 5: Manage position

Monitor your position in the “Positions” tab. To close, you can:

• Close the entire position at once
• Close part of it to take profit while maintaining some exposure
• Set automatic close orders at certain prices

Technical analysis for short trading

( Using Moving Averages)

50-day and 200-day moving averages are two common indicators. When the 50-day crosses below the 200-day (death cross), it often signals a bearish trend. This can be an appropriate time to consider a short position.

Relative Strength Index (RSI)

RSI measures the speed and magnitude of price changes. RSI values:

• Above 70: Asset may be overbought
• Below 30: Asset may be oversold
• Between 30-70: Neutral state

When RSI is high (overbought), bearish traders may see this as a shorting opportunity.

Support and resistance levels

Traders must identify key price levels where BTC is likely to bounce (support) or be pushed back (resistance). When shorting, profit targets can be set at previous support levels, while stop-loss should be placed above the nearest resistance.

Current status of Bitcoin (January 2026)

According to the latest data, Bitcoin is trading at $96,390, with the following fluctuations:

• Past 24 hours: -0.79%
• Past 7 days: +6.27%
• Past 30 days: +9.68%

Bitcoin remains below its all-time high ($126,080), indicating room for growth. However, recent increases also show signs of overbought conditions at certain times, creating opportunities for traders to seek correction phases.

Real-world example: Planning a short trade

Suppose a trader observes BTC at $96,390 and notes:

1. Negative technical signals: 50-day moving average about to cross below the 200-day
2. High RSI: RSI around 65-70, suggesting overbought asset
3. Strong resistance: Price struggling to break above $98,000

The trader might:

• Enter short at $96,390 with 0.5 BTC
• Set stop-loss at $99,000 (above resistance)
• Take profit at $92,000 (previous support)
• Reward-to-risk ratio: $2,195 profit vs $1,305 risk (ratio 1.68:1)

Although technical signals look favorable, traders should remember that any positive news or unexpected events can reverse the trend instantly.

Important notes and risk management

Avoid excessive leverage: Small price movements with high leverage can lead to liquidation. Beginners should start with 1x leverage (no leverage).

Always set stop-loss: This is the only way to protect your account from mistakes. Never let a short position run uncontrolled.

Don’t short too much capital: Professional traders typically risk only 1-2% of their capital per trade. This ensures that a series of losses won’t destroy the account.

Approach gradually: If you are new, use a demo account or trade with very small amounts before engaging in real trading with larger capital.

Conclusion: Is shorting Bitcoin a good choice?

Shorting Bitcoin is not for everyone. It requires:

• Deep understanding of technical analysis
• Strict risk management skills
• Stable trading psychology
• Experience and practice

However, for experienced traders, the ability to short-sell Bitcoin offers great flexibility. They can profit from both rising (long) and falling (short) markets, as well as use short positions to hedge their investment portfolios.

Start by learning what a long short order is, practicing on a demo account, and only when confident, move to real trading. Remember, the cryptocurrency market is highly volatile – it’s wise to always prepare for the worst-case scenario.