Short

Going short means taking a position that profits when the price falls. In its classic form, a short seller borrows an asset, sells it at the current price, and later buys it back cheaper to return to the lender, pocketing the difference. In crypto, most shorting is done more simply through derivatives such as perpetual futures.

For example, a trader who shorts 1 BTC at $60,000 and closes the position at $54,000 earns $6,000 before fees and funding costs. If BTC instead rises to $66,000, the trader loses $6,000 — and with leverage, a smaller adverse move can wipe out the margin entirely.

Shorting has an asymmetric risk profile: the maximum gain is capped (price can only fall to zero) while the theoretical loss is unlimited, since price has no ceiling. Crowded shorts also fuel short squeezes, where a rising price forces shorts to buy back, pushing the price up further. A common misconception is that shorting is inherently manipulative or "betting against the ecosystem"; shorts add liquidity, express negative information, and are a normal part of price discovery in any mature market.