How to Short Crypto – 2025 Guide

Bitcoin was trading at a level higher than $100K when it entered 2025. As people appreciated that the world’s apex crypto had reached the golden mark, some, like Arthur Hayes, feared that another correction would happen, pushing the BTC price to around the $70K levels before the surge could begin again.

Surprisingly, it happened. But while many started to look for altcoins in order to offset their Bitcoin gains, those who were wise enough to take Arthur’s comments seriously raked in gains through shorting Bitcoin.

Shorting Bitcoin, and shorting crypto in general, has become one of the best ways to make money from BTC when it is going down. Although the environment is currently bullish, the cycle will eventually end. Those who understand the ways to short Bitcoin could take advantage of this opportunity and make gains.

This guide explores the entire methodology of shorting. What is it? What are the ways to do it? And what are the risks involved? It will also highlight the best tips to keep in mind when shorting, before taking a look at CoinFutures, a platform that offers a gamified take on shorting BTC.

What is Shorting Crypto?

Shorting crypto, in the simplest terms, is speculating that the price of a cryptocurrency will go down. Here, instead of buying low and selling high, shorters borrow at high and buy at low.

It essentially involves two entities: the exchange or a Bitcoin lender from which the Bitcoin is borrowed, and the trader.

First, the trader borrows crypto from the lender. Then, hoping that its price will decrease, the trader sells the asset to the market at a given price. When the price eventually drops, the trader buys back the crypto and returns it to the lender (along with some commission fees).

The trader’s profit comes from the difference between the selling and buying price.

The following example will help investors understand it in a more practical manner:

• Suppose Bitcoin is currently valued at $100,000 and the trader expects it to go down to $50,000.
• The trader then goes to an exchange to borrow, say, 1 BTC and sells it at the current market price of $100,000.
• Now, suppose the Bitcoin price does fall to $50,000. From the $100,000 gained from selling the borrowed BTC, the trader buys back the now lower-priced crypto.
• In the end, the trader returns the borrowed BTC to the lender and pockets the remaining $50,000 without investing any of their own money.

This approach is essentially a way to make money from any cryptocurrency’s losses without spending a dime, which is one of the core reasons why it has been getting so much attention.

The video above is by 99Bitcoins, one of the leading crypto educators on YouTube. It highlights all the key points related to shorting Bitcoin.

What are the Ways of Shorting Crypto?

There are multiple ways to short Bitcoin. Here are the top 5 ways that can be used rather easily.

Contract for Difference (CFDs)

Contracts for Difference, or CFDs, are financial instruments that allow one to speculate on an asset without owning any of it. So, they essentially let users predict Bitcoin’s price without actually owning any BTC.

In this method, the trader enters into an agreement with a broker, and then the profit or loss is calculated based on the difference between the entry and exit prices. For instance, if traders choose to “go short” and Bitcoin’s price falls, they earn the difference.

The biggest advantage of this approach is that CFDs remove the need for wallets or dealing with private keys. Trading on leverage is also possible through these instruments, although not at the same level as crypto-native futures platforms. The drawback, however, is that CFD trading might not be available in all regions due to regulatory restrictions. Also, there are fees like spreads, overnight charges, and margin involved with the entire ordeal.

Leverage Shorting

Leverage shorting is a strategy where traders borrow funds from an exchange to open a short position larger than they can afford. For instance, if a trader has only $100, they can use, say, 5x leverage in order to short $500 worth of crypto.

The good part is that even a slight drop in price can give traders a significant advantage, since they are dependent on the multiplier. The risks, however, are equally amplified. If the price moves against the trader’s position (goes up instead of down), their losses multiply just as quickly. While some exchanges let traders liquidate positions quickly, others can even choose to close the trading account, especially since traders are using capital they don’t actually have.

Due to the heightened risks, this method is not suitable for beginners. Also, exchanges put a cap on how much loss is allowed.

Bitcoin Options Trading

Bitcoin options trading is a different form of trading where, instead of an obligation, traders buy the right to sell Bitcoin at a specific price before a set expiration date. Traders looking to short Bitcoin use put options, which increase in value as BTC falls.

This style of trading lets traders cap their maximum loss at the premium paid for the contract (essentially a way to manage risks). Therefore, this is an ideal shorting method for those looking to prevent a higher degree of losses. That being said, options trading can be complex and involves understanding factors like implied volatility, time decay, and strike prices. So, those willing to try it out should first develop a solid understanding of derivatives.

Inverse Tokens

Inverse tokens are synthetic assets designed to move in a direction opposite to that of Bitcoin. For instance, there could be an asset like BTCDOWN, which will increase in value when the BTC price drops. Exchanges like Binance offer this facility, often with 1x to 3x leverage.

They provide one of the easiest ways of shorting since there is no need to deal with liquidation risks, or manage collateral or margin. The process is simple: the trader buys a token, and that token increases in value when the Bitcoin price falls.

The prices of these inverse assets are reset daily, which means only short-term, intraday traders should use them.

Gamified Shorting

Another approach is gamified trading. This method does not involve the actual exchange of assets and is done under simulated conditions. Users can simply select an asset and “bet” on whether the asset’s price will go up or down.

CoinFutures is a platform that uses this premise. It works with CoinPoker’s framework and treats investors like gamers, which further makes it suitable for beginners as well.

What Are the Risks of Shorting Crypto?

Shorting looks very appealing, especially since in most of its forms, an investor’s money isn’t directly involved. However, there are no freebies here, and the risks could be considered too high.

Unlimited Loss Potential

Unlike buying crypto, where at most, investors would lose only their investment, shorting carries the risk of unlimited losses. This happens because a cryptocurrency’s price theoretically has no upper limit. If the market persists, it could keep rising indefinitely. This is especially worrisome now because of all the institutional backing BTC has been getting.

For instance, if a trader opens a short position at $70,000 and Bitcoin shoots up to $150,000, the loss becomes massive. And if that trader is also using leverage, losses are exacerbated, which means even a 10% upward move could wipe out one’s position.

Exchange Risks

When shorting crypto, especially using leverage or derivatives, traders rely solely on the integrity of the exchange. But if the platform goes offline, suffers a hack, or even manipulates liquidation prices (which is known to happen), the trade gets closed forcefully, and the account can even vanish entirely. It has happened to the likes of FTX in the past and could happen even today.

Also, centralized exchanges aren’t very transparent about their liquidation engines. And if the market moves too fast, traders may not even get the chance to react. It does not matter how many risk management features are at play, as even with tight stop-losses, slippage or sudden downtime can trap a trader in a losing position.

Funding and Borrowing Costs

When shorting Bitcoin via perpetual contracts or borrowed assets, traders often need to pay funding fees or interest on borrowed crypto. These rates can spike on days when the market is particularly volatile, which ends up eating into profits or adding to losses, even if the price hasn’t moved much.

These fees might seem like minor inconveniences at first. However, they can quickly accumulate, especially if the trader is holding a position over several days or weeks. When an asset’s price has stagnated, users might end up paying more in funding than they gain from price moves.

Short Squeeze

There are many even now who remember the great GameStop short squeeze, an event where hedge fund companies wanting to short GameStop stocks found themselves at the losing end of the spectrum when retail investors rallied the stock, increasing its value by thousands of percent.

It is one of the biggest threats to shorting crypto. If the market turns against shorters, many try to buy back their positions to cut losses, which ends up increasing the Bitcoin price. As the price continues to rise, the threat of losing funds continues to grow, leading to more people liquidating their short positions.

Whale manipulation is one of the biggest reasons behind this. For instance, since Bitcoin has a lot of institutional pull behind it, especially after Donald Trump became president, things can turn awry for those trying to go against BTC.

Tips to Follow When Shorting Crypto

Check the Historical Price Triggers

Before shorting Crypto, it is important for traders to study past events that caused sharp price drops. These include anything from exchange hacks (like Mt. Gox or FTX), to regulatory crackdowns (such as China’s mining ban), and network issues (delays in upgrades or bugs). History has a way of repeating itself in crypto, and understanding how Bitcoin reacted during these past events can help one anticipate similar price behavior in the future.

Traders should consider setting alerts or using sentiment tools to track similar developments in real time. If familiar warning signs emerge, opening a short position becomes desirable, and it also gives users a better exit strategy if the market goes up.

Using Tight Stop-Losses and Take-Profit Levels

Since shorting Bitcoin is very risky, there should be a proper exit plan. When the market is volatile, the price can swing violently in minutes. Therefore, users need to define stop-loss levels, which limit the losses, and take-profit levels, which lock in the gains, before opening a position.

A good rule of thumb is never to risk more than 1 to 2 percent of the trading capital per trade. Also, using limit orders instead of market orders to avoid slippage, and adjusting stop-loss levels dynamically, helps with making a quick exit.

Choose the Right Platform

Not every platform behaves the same way. There have been some exchanges in the past that manipulated wick prices to trigger liquidations, especially in highly leveraged environments. While the number of such exchanges has gone down following the emergence of more progressive regulations, investors should still choose platforms with a clean track record, transparent liquidation engines, low downtime, and strong security protocols.

Binance is one of the leading exchanges in this regard. However, CoinFutures can also be trusted, since it is a gamified platform and has a more decentralized approach.

Also, investors should check whether the platform offers features like isolated margin, which is critical to ensure that one trade doesn’t wipe out the entire account. Options like customizable stop-losses and access to both futures and options should also be available.

Time The Entry During Overbought Conditions

Investors should avoid shorting during sideways or uncertain markets, as these increase the chances of getting chopped up. Instead, they should look for overbought conditions, where the BTC price has spiked too rapidly, showing patterns like the “three white soldiers.”

At that time, RSI should be watched closely. If it is above 70, a price correction generally follows.

CoinFutures: Gamified Crypto Shorting

Developed by CoinPoker, CoinFutures offers one of the most robust ways to short: a gamified approach. With its simple UI and premise, it lets users predict whether the price of an asset will go up or down, then enter a specific price prediction.

Offering a multiplier of up to 1000x, where the risk slider increases and the prediction becomes more wild, CoinFutures does feature some risk, but it is limited to the funds users wager. For instance, if a user bets $50 that Bitcoin’s price will drop and it doesn’t, the only money the user loses is the wagered amount. There is no asset changing hands and no BTC being sold to the market. It is pure prediction.

And the best part is that users can cash out at any time if they see the market turning against them, which makes this a more optimal form of shorting.

How to Short Crypto Using CoinFutures

Here are the steps to short crypto using CoinFutures:

Step 1: Visit the Official Website and Download CoinPoker Client

The first step is to go to the official CoinFutures website and download the CoinPoker client. Once that’s done, users will need to register an account. They can then log into their accounts.

Step 2 – Select Crypto Futures Tab and Choose Bitcoin

Once logged into the client, users should visit the Crypto Futures tab. From there, they must select Bitcoin o any other crypto from the dropdown list. In most cases, however, Bitcoin is selected by default.

Step 3: Select “Down” to Short Bitcoin and Place Bet

To short an asset, investors must select the “Down” option. They can then set the betting amount, starting from $1. After that, they can enter the multiplier and place their bet. The higher the multiplier, the greater the risk.

Here, risk is mostly associated with the likelihood of achieving a specific outcome. In the case of Bitcoin, the bust price decreases as the multiplier level increases. Afterward, users can confirm and set their bets.

Step 4: Cash Out

The final step is cashing out, which happens once the Bitcoin price drops and the prediction succeeds. However, CoinFutures also allows investors to cut their losses and cash out early — before the market goes “bust.”

Conclusion

Shorting is a clever way to generate gains from a cryptocurrency’s volatility. However, it also comes with risks. This guide has highlighted the top methods through which investors can short BTC.

Among them, CoinFutures stands out as the best option. With its gamified approach, it offers a simpler way to engage in shorting crypto. Analysts like 99Bitcoins have also discussed this platform, citing its robust interface and straightforward trading methodology as key reasons why it is suitable for most investors.

Visit CoinFutures

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