Short Positions represent an investment strategy where a trader speculates on a decline in an asset’s price. This involves borrowing an asset, selling it, and then repurchasing it later at a lower price to return to the lender, profiting from the price difference. In crypto markets, this can be executed through derivatives like futures or options, or via margin trading.
Context
Short positions are regularly discussed in crypto news, especially during periods of market downturn or heightened volatility. Large volumes of short liquidations can trigger rapid price increases, a phenomenon known as a short squeeze. Understanding the prevalence and impact of short positions provides insight into market sentiment and potential price movements for digital assets.
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