Short Selling
A trading strategy where an investor borrows and sells an asset they don't own, hoping to buy it back at a lower price later and profit from the difference. In crypto, shorting is done through derivatives, margin trading, or futures contracts.
Why It Matters
Short selling involves borrowing assets to sell them at a high price with the aim of buying them back later at a lower price. This is important as it allows investors to profit from declining asset prices, but it also introduces substantial risk.
Example
If you believe a cryptocurrency will decrease in value, you can short-sell it. For instance, you sell a token at $100, hoping to buy it back at $80, profiting from the difference.
Beginner Context
For those new to crypto, understanding short selling is key to grasping different trading strategies. It helps highlight both opportunities and the risks involved when betting against asset prices.
Mike Starr
Founder, CryptoWizardTools · M.S. Organizational Management
Last reviewed: August 2026
Related Terms
Airdrop
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Double Spend
A potential flaw in digital currency systems where the same coin is spent more than once. Blockchain technology solves the double spend problem by using a distributed ledger that confirms each transaction only once across the network.
APY
Annual Percentage Yield. The effective annual return on an investment, accounting for the effect of compounding interest.
Oracle
A service that provides external real-world data to smart contracts on the blockchain. Oracles bridge the gap between on-chain and off-chain data.
ATL
All-Time Low. The lowest price ever reached by a cryptocurrency or asset.