Short positioning, or “going short,” is an investment strategy where a trader sells an asset they do not own, anticipating a price decline, with the intention of repurchasing it later at a lower cost. The profit derived from this strategy is the difference between the initial selling price and the subsequent lower repurchase price. This approach allows investors to potentially gain from falling asset values.
Context
Short positioning is a common practice in traditional financial markets and holds increasing relevance in cryptocurrency trading, particularly for hedging against price declines or speculating on bearish market movements. News reports often discuss the volume of short positions in Bitcoin or Ethereum as an indicator of market sentiment and potential price pressure. High levels of short positioning can sometimes precede short squeezes, contributing to market volatility.
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