Short Selling
Betting that a price will fall by selling an asset you don't own, then buying it back cheaper.
You borrow a coin, sell it now at $100, and hope to buy it back at $70 to return it, pocketing the difference. In crypto, most shorting happens through derivatives like perpetual swaps rather than borrowing the actual token.
The danger is asymmetric. A long can only fall to zero, but a short loses as price rises, and price can rise without limit. A sharp rally can trigger a short squeeze that forces buybacks and pushes price even higher.
Related terms
A bet that an asset's price will rise, profiting as it climbs and losing as it falls.
Short PositionA bet that an asset's price will fall, made by selling borrowed coins to buy back cheaper.
Perpetual SwapA futures contract with no expiry date, kept aligned to spot price by recurring funding payments.
LiquidationThe forced closing of a leveraged position when losses drop its collateral below the required minimum.