Definition ∞ Short exposure refers to an investment position that profits from a decrease in the price of an asset. In digital asset markets, this typically involves selling borrowed cryptocurrency with the expectation of repurchasing it later at a lower price. This strategy allows investors to capitalize on anticipated market downturns. Short exposure carries significant risk, as potential losses are theoretically unlimited if the asset’s price rises indefinitely.
Context ∞ Discussions about short exposure are common in crypto market analysis, particularly during bear markets or periods of high volatility. Traders use various derivatives and lending platforms to establish short positions. The availability and liquidity of shorting mechanisms can influence market dynamics and price discovery for digital assets.
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