Shorting sells an asset the trader does not own, with the obligation to buy it back later. In crypto this is almost always done through a derivative rather than by borrowing the coin itself — a perpetual or dated futures contract gives short exposure without anyone having to locate and lend the underlying.
The risk profile is not symmetrical with a long. A long position can lose at most what was put in, because the price can only fall to zero; a short's loss grows as the price rises, and the price has no ceiling. Rapid upward moves also force shorts to buy back to cover, which adds buying pressure and drives the price higher still — a short squeeze.
Why is shorting considered riskier than going long?
Losses on a long are capped at the amount invested. A short's losses rise with the price and have no defined limit, and a squeeze can move the price against the position faster than it can be closed.
Last updated October 17, 2026