The crypto market has had a good year, recovering some losses suffered in 2022 during the latest crypto winter. While Bitcoin (BTC) broke above $31,000 on June 23 to update the year-to-date (YTD) high, the largest cryptocurrency by market cap still has a long way to go before it breaks above its record-high established at the end of 2021.
Following the impressive rally that pushed Bitcoin’s price close to $70,000 in November 2021, the market has been in free fall for months. The valuation of the premier cryptocurrency continued to drop until the end of 2022, tumbling to less than $16,000 last November.
The bearish pressure was fueled by significant crashes in the crypto space, including LUNA, Three Arrows, Celsius and FTX.
A multi-month bearish trend can be challenging for crypto investors, who’re mostly hoping for a long-term increase given Bitcoin’s deflationary model. A long-term price decline can be frustrating even for hodlers, who may feel some pressure to cash in at some point to avoid losses.
The good news is that Bitcoin and major altcoins have been recovering this year, and the end of June has been particularly generous, with the market expecting the first Bitcoin exchange-traded funds (ETFs) to be approved soon. However, even if there was no light at the end of the tunnel, crypto traders shouldn’t despair. Digital assets are volatile, and the market always has opportunities.
The best way to profit during a downtrend is to open short positions and leverage the price decline. Unlike stock traders, who have to take additional steps to short company shares, crypto traders can go long or short with the same ease.
Crypto traders may be interested in going short on Bitcoin or an altcoin when they expect the price to
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