When to go short in the cryptocurrency market?
During the past month of November, we were able to see how the cryptocurrency market collapsed more deeply. Much of this collapse occurred due to a decline in the confidence of most investors. In December, the price of Bitcoin has remained extremely stable, with variations of 2% on average. That is, it has remained in the range of 16,500 and 17,700 dollars per token, having reached a maximum on December 14.
All these data indicate that the queen cryptocurrency is in a period of stability in which it is quite safe to invest in CFDs or other types of short-term investment modalities. So, when should we short the cryptocurrency market? Next, we’ll find out.
In clearly bearish trends
The first case is quite obvious for this type of investment. Crypto Shorting is a type of investment that seeks to take advantage of bearish trends in the markets. Shorting can also be done in cryptocurrencies and clear downtrends are an opportunity to open what is known as “short trades”. Specifically, you should start selling your cryptocurrencies when the market is closest to the start of a decline. That is, you must start the sale operation when the market begins to fall, but the bearish trend must be evident, which means that applying indicators and oscillators results in a high probability of a bearish trend.
This will allow you to sell when the market is at its highest and buy back when it is at lower prices. This technique allows you to get the most out of downtrends and there are many ways to carry them out more safely, including scheduled alerts. You can find more info on Margex about this topic, a cryptocurrency trading platform where you can do Crypto Shorting.
Before the fall generates losses
If you have been holding cryptocurrencies for some time or made a purchase when the market was beginning an apparent uptrend, you may be reluctant to let go of your assets early in a price decline. However, you should not maintain this attitude if the price is dangerously close to your initial capital, and it is important that you activate a Crypto Shorting operation before this happens.
It is important that whenever you invest in cryptocurrencies you regularly review the state of the market, because even during more stable times, cryptocurrencies are known for their high volatility. This means that even when the trend is up, periods in which the market usually generates significant bubbles, it is very likely that the trend will reverse suddenly. Previous crashes are an example of this, as many enthusiastic analysts expected Bitcoin to surpass $100,000 during 2020; Since this was not the case and the market collapsed, Bitcoin has found it difficult to resume a steady growth rate, and has remained stable at more moderate prices.
It is for this and other reasons that crypto shorting is a tool that may become highly necessary in the crypto market, so that investors can have greater control over the movements they make.