This involves buying coins outright, which means you own the assets yourself and the market value of your cryptocurrencies determines your profit. In this case, you’re buying into currency on the basis that its value is going to increase over time. Taking a long position on cryptocurrencies is the most straightforward investment strategy. Now, let’s look at how you can long/short cryptocurrencies. With a cunning long/short cryptocurrency strategy, you can protect your investment from market volatility and profit from prices as they move both ways. In the space of two months, roughly $13,000 per coin was up for grabs as prices plummeted from almost $20k to under $6k.īetter yet, if you took long positions on Bitcoin back when prices were under $1,000 and took short positions while they were approaching $20k, you would have pocketed on the long-term value increase and made a serious profit on top of the early-2018 crash. Taking a short position on Bitcoin when its prices were at their highest and then paying back at the peak of the “crash” was the most prominent Bitcoin opportunity we’ve seen so far – by a long margin. Shrewd investors knew prices couldn’t remain at the $20k for long they knew Bitcoin prices were overvalued and its value would have to drop sooner or later. The key is being able to identify when assets are undervalued and when they’re overvalued.Īs we explained in the last section, there was a lot of money to be made in short selling Bitcoin over the past 12 months. The cryptocurrency market is one of the most volatile investment arenas we’ve ever seen, and a long/short strategy means you can make a profit as prices rise and fall, both of which inevitably happen throughout the year. Why Should I Long/Short Cryptocurrencies? You could have sold those coins for $19k at the time and then paid back your lender roughly $6k per coin when prices were at their lowest in February 2018 – making a tidy $13,000 profit on every coin.Ī long/short strategy is when you combine these two investment methods to take long positions on assets you expect to increase in value and short positions on those expected to drop while making a profit on both outcomes. So, let’s say you bought a bunch of Bitcoin at around $19,000 per coin in November last year. The aim is to sell at a high price and then pay back your lender at a lower rate when values drop, by which time you’ve pocketed the difference for yourself. In the case of a short position, you’re essentially borrowing an asset with the expectation that its value will decline. When you take a long position on an asset, you’re buying it outright, which means you own the stock itself and your profit relies on it increasing in value.Īs a crypto investor, this is the equivalent of buying Bitcoin or other digital currencies on an open market when you expect prices to increase over a reasonable period. The easiest way to explain a long/short investment strategy is to define what we mean by “long” and “short”. ![]() What Is a Long/Short Investment Strategy? Why should I long/short cryptocurrencies?įirst, let’s start by explaining what a long/short strategy is in simple terms.What is a long/short investment strategy?.In this guide, we’ll be showing you how to long/short cryptocurrencies and what this can bring to your investment strategy.īy the time you’ve finished reading this, you’ll know the following: ![]() If you like the idea of making money when cryptocurrency prices go up and down, then this is a strategy you want to pay attention to. A long/short investment strategy is usually associated with hedge funds, but a growing number of cryptocurrency owners are using the same approach to diversify their portfolio and increase their profits.
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