Time to Short Cryptocurrencies? How to Trade When Prices Plunge

Cryptocurrency prices have been perpetually rising for such a long-time period that most of us thought they can never go down. But the opposite is the truth and we are just experiencing one of the biggest hit that most cryptocurrencies ever took.

Bitcoin is down by almost 3 000$, Ripple by almost 25% and practically every cryptocurrency at coinmarketcap.com is in red numbers. Most investors want to profit only when their favourite cryptocurrency goes up, play it safe and count on the fact that cryptocurrencies really are the future of the financial system. That being said cryptocurrencies cannot keep up with their positive sentiment forever or at least not with the speed they had for the past several months. Today we are going to answer questions whether it’s a right time to short cryptocurrencies. And if so, how to do it properly.

Why is Ripple Falling More Than Other Popular Currencies?

Ripple is not just another cryptocurrency in a long list, it´s extremely special cryptocurrency with a payment gateway supported by UniCredit, Fidor and CBW Bank. You can´t even mine it. The only way how to get your hands on ripple is to buy it from other users. You can use it for payments in a real-time or as an investment instrument. Many investors, including me, do think that it might have even a brighter future than Bitcoin. Bitcoin is slow and its fees are becoming so huge that you have to buy or sell a big amount to even have a chance to make some profit.

That being said, today is not the best day for the exchange rate of Ripple, which falls even more than BitCoin, why? It may follow the price of BTC, but you have to take in mind that the last weeks went Ripple extremely up and for several days it even took the position of the world’s second most valuable cryptocurrency from the hands of Ethereum. Which may be one of the main reasons why Ripple took even bigger hit than Bitcoin. I highly advise you to monitor the exchange rate of ripple on your own eyes because this is cryptocurrency overcame all expectations in the 2017.

Cryptocurrencies are About to Hit the Bottom

Okay, now when I have your attention, let me clarify this. It is not very likely that in the near future prices of cryptocurrencies could so significantly drop that they would be worthless. Be that as it may, many crypto experts think that Bitcoin and other cryptocurrencies are in one big bubble which is on a clock. If that really is so, it is only a matter of time when this bubble bursts. Once it does, you surely want to stay ahead of the market and act quickly. Bitcoin has taken over course of its 9-year existence several times a big hit. In the year 2017 it looked, however, unstoppable and many investors thought that nothing can break its continued growth which is acquired mainly by a huge massive exposure to the public that lures many new investors to join the market. We, however, do no longer talk only about Bitcoin, but likewise about Ethereum, Ripple, Litecoin and other giant cryptocurrencies that are seen in a completely new light in comparison to the year 2016 when most people knew only about BTC. Prices of all of these cryptocurrencies are primarily shaped by the demand. When the demand rises so does the price. You might have noticed that even people around, complete crypto beginners, are intrigued by the rise of Bitcoin’s value, even though they don’t really know how it works or it’s real potential. These people are very easily manipulated and if you would have shown them how Bitcoin is doing this year, the would say “okay how do I invest in Bitcoin”. Such investors do not really know what they are doing and they are, therefore, easily influenced. This means for the market that if a news comes knocking on the door which is in anyway associated with a cryptocurrency, they will follow other investors and get rid of their Bitcoins at the minute when something goes wrong. Being able to predict these events allows you to profitable short cryptocurrencies.

Contracts for Difference - How to Short Cryptocurrencies

You will probably read in every good cryptocurrency trading course for beginners that shorting cryptos is a suicide. That, however, might not be the case anymore. The top 100 cryptocurrencies are almost all down by 15% and a continuing decline in their price is very likely. In order to profit from these downturns, we need to be very careful. One of the most appealing choices when it comes to shorting cryptocurrencies is through CFDs. These contracts are constructed between you and a brokerage company where you both agree to buy or sell a cryptocurrency for a certain price at a certain moment. CFDs instruments also allow you to short cryptocurrencies with leverage, which means that you can use more capital than you actually have. As a result of that when a big crash of cryptocurrencies comes and you use a leverage for example 1:5 you earn 5 times more than if you were not to use this. Consequently, if the price of the cryptocurrency you trade goes up, you lose 5 times more. It is a great tool in the hands of professionals, but trading beginners might destroy their capital rather swiftly.

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