Definition ∞ Short Selling is a trading strategy where an investor sells borrowed assets with the aim of repurchasing them at a lower price. This market technique permits traders to profit from an anticipated decrease in an asset’s price. The process involves borrowing an asset, selling it immediately, and subsequently buying it back at a reduced cost to return to the lender. The difference between the selling and buying price, excluding any fees, represents the trader’s gain.
Context ∞ Short selling is a common practice across traditional financial markets and is increasingly prevalent in the digital asset space, often influencing cryptocurrency price volatility. High levels of short interest can signal bearish sentiment, while short squeezes can trigger rapid price increases. Market analysis often considers short positions as a key indicator of investor expectations and potential market reversals.
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