Sunday, August 30, 2020

How to profit from a bitcoin market correction

Key facts:
Shorting allows you to take advantage of opportunities when the price of an asset like Bitcoin falls.
Selling short can be a very effective strategy for cryptocurrency trading.

Some of you will remember the 2015 Oscar-winning movie The Big Short. This film, an adaptation of Michael Lewis' book, follows some key American people who not only predicted the 2007-2008 housing collapse, but ultimately benefited from it.

They did this using a strategy called "shorting" and, although in this particular example it was unethical and risky, shorting can be a very effective strategy for trading cryptocurrencies. Using YouHodler's Multi HODL tool, crypto shorting is an efficient way to borrow crypto, sell it, and make a profit.

The Short strategy for crypto trading is not always "negative"

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 some chosen people who pray for the demise of the entire crypto market only that their short positions will make them rich, but we don't support that behavior.

Also, there are much less risky ways to profit from short selling, such as on YouHodler. Before delving into this cryptocurrency trading strategy, let's first explain in simple terms what shorting actually does.

In the stock market, stock "shorting" occurs when an investor borrows shares in a company from a broker or owner. Then the investor sells those shares at the current market price. There is a contract whereby the shares will be replaced at some point in the future (ideally at a lower price to the investor). Therefore, the market short sale is done in the hope that prices will decline in the future so that the investor can repay the loan and keep any excess earnings. Now, let's apply this example to Multi HODL

How to use the short strategy with Multi HODL

When you click the "DOWN" button in Multi HODL, you are effectively opening a short position in the cryptocurrency of your choice (eg Bitcoin). In this situation, the user borrows Bitcoin from YouHodler to sell it at market price. If the price of Bitcoin then drops, the user benefits because he can buy the same amount of Bitcoin to repay the loan at a lower price and keep all the profits. If it goes up, you lose money.

Of course, the user is not doing this manually as they would on a margin trading platform. Everything is done behind the scenes, automatically through our Multi HODL tool.

Some people see short selling as a controversial instrument because it means that they are betting on the demise of Bitcoin, for example. However, this is not the case. All markets have natural ebbs and flows. Bitcoin doesn't just go up. Regardless of a bull or bear market, Bitcoin will have boom and bust days. Shorting is simply a way to seize opportunities when an asset like Bitcoin falls. Besides the obvious benefit of profiting from a successful short position on Multi HODL, there are several additional pros.

Advantages of the short strategy for crypto trading

Using Multi HODL to open a short position has a wide variety of benefits for many crypto traders of different skills. For example:

1.Opening a short position on Multi HODL gives users unique access to tools and assets that they would never otherwise have. Regardless of the size of the portfolio, they can benefit from a decrease in the value of a crypto asset without actually owning that asset.

  2.With Multi HODL's multiplier slippage tool, users can manage their risk effectively and open positions up to 10 times larger than their available capital.

3.Short selling is better than just HODLing. If your HODL Bitcoin goes down $ 1,000, then you lose $ 1,000. However, shorting BTC in that situation would turn a negative situation into a positive one.

4.Shorting in Multi HODL comes with a full range of management functions, how to adjust "Take Profit" and "Margin Call". This gives the user more control over his position, allowing him to exit the market at the most profitable time (see image below).

Try short selling today with YouHodler

Short selling is a well known, popular and, as we just discussed, profitable strategy for crypto trading. With more than 14 crypto asset options on the platform, you have multiple possibilities to short and profit every day. Short selling on YouHodler comes with competitive rates, administrative tools to help you better monitor your position, and a user-friendly interface for traders of all skill levels.

So don't limit yourself to HODL and watch your earnings decline. Take advantage of every market crash on a short position. Maybe one day, he'll even have a "Big Short" story to tell everyone.