How does short selling work in the context of digital currencies like Bitcoin?

1 answers

• Uday KiranSep 15, 2023 · 2 years ago
  Short selling in the context of digital currencies like Bitcoin is a strategy used by traders to profit from a decline in price. It involves borrowing Bitcoin from a broker or exchange, selling it on the market, and then buying it back at a lower price to return to the lender. This practice can be useful for hedging against potential losses or for speculating on the price movement of Bitcoin. However, it's important to note that short selling carries risks, as the price of Bitcoin can be highly volatile. Traders should have a thorough understanding of the market and use proper risk management techniques when engaging in short selling.
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