What does 'buy to cover' refer to when it comes to investing in cryptocurrencies?

1 answers

• TuwaseFeb 09, 2022 · 3 years ago
  When it comes to investing in cryptocurrencies, 'buy to cover' is a term you should be familiar with. It refers to a situation where an investor who has previously sold a cryptocurrency short decides to close their position by purchasing the same amount of cryptocurrency they initially sold. This strategy is often employed when the investor believes that the price of the cryptocurrency will increase in the future, and they want to minimize their losses. By buying to cover, the investor effectively ends their short position and fulfills their obligation to return the borrowed cryptocurrency. It's worth noting that 'buy to cover' is primarily associated with short selling and is not relevant for regular long-term investments in cryptocurrencies.
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