This chart shows Dogecoin’s price from 2017 through 2019 where the meme crypto lost most of its value. Dogecoin is down well over 50% from its all-time high price of about $0.70 per coin. Today, DOGE is trading at a modest $0.24, but the crypto still holds a market capitalization of over $30 billion dollars. Highly unlikely because of the structure of the crypto market and the unlimited supply of Dogecoin. Any short squeeze would be a very short-term phenomenon. When it comes to Dogecoin, we have seen wild swings from time to time, and over the last couple of years, it’s been mainly to the downside.
Upon doing this, you can return to the DOGE/USDT page and then click on the Sell/Short Button. Should you predict that Doge will go down, you must make use of the short Button. A short option contract comes in two variants – a put option and a call option. Taking an isolated position means that you allocate your margin to a single position. Thus, your margin cannot be used on any other position.
- PrimeXBT products are complex instruments and come with a high risk of losing money rapidly due to leverage.
- This lowers the risk to your portfolio since when one position collapses, your other positions aren’t affected.
- Even though this coin has a very low acceptance rate, a single Tweet or Instagram mention causes significant price increases.
- Shorting is essentially the opposite of buying long, which involves purchasing an asset with the expectation that its value will increase.
- It is advised that you don’t use too much leverage as that can leave you with losses of up to thousands in U.S. dollars and can also leave you liquidated.
DogeCoin has majorly depended on social media for its upward push, with tweets from people like Elon Musk and Mark Cuban being influential to that cause. Most times, when DogeCoin makes it to the top of the trend table, it is often because major Companies are willing to take it up as a means of payment. Your USD account Is then converted to USDT, after which you transfer those funds into your USDT wallet.
This margin plus the top-up advanced by the crypto exchange broker makes up the sum of the issued and payable loan. At PrimeXBT, you can match short CFD orders with buyers in about any increment you choose. This allows you much more flexibility with position sizing and risk management.
Shorting Dogecoin Example
The cold hardware wallets are not the best place for this funny moment. Let your meme coin be ready to launch from hot wallets. This way, you can quickly short your Doge for more memes and fill the gains in your desired crypto wallets. Take advantage of the above Top 7 different ways to short dogecoin and let your digital wallet bulge with more memes. A Dogecoin futures contract (or simply Dogecoin futures) is a contract to sell or buy a specific amount of Doge at a predetermined future price.
This is the time for you to strike while the iron is hot, as you can use these shorting opportunities once the hype has eased off significantly. Regardless of your proficiency in trading, you will need to decide wisely on whether to use marginal funds. An isolated position is advised to ensure you don’t lose too much money in the case of a loss on your trade. This difference in the price of Dogecoin is settled in cash (or stablecoins such as USDT). The Doge amount then becomes collateral that you possess but the brokerage retains the ownership rights until the loan is repaid. In this example, you have a 3x leverage on your margin.
How to Analyze Dogecoin’s Price Movements
In this article I will walk you through how to short Dogecoin and what you need to be aware off. But, investing isn’t stuck around only with an idea to invest. You will need to learn and practice a bunch of the principles and strategies of an investment to earn from it, shorting Dogecoin is one of these strategies. When you trade with leverage, your capital is used to cover the margin based on your degree of leverage.
- By “shorting” Dogecoin, you are selling it to somebody else with the idea of buying that position back at a lower price.
- Recognize that the market will occasionally bounce, and take profit on lengthy down.
- If you belong to the latter group, you might be interested in learning how to short dogecoin.
- Beyond that, you do not have to “borrow” Dogecoin as you would in the futures market and then reconvert when you close out your position.
- These underlying characteristics can then be used to forecast the asset’s future price performance.
You can use the USD Chart to determine the USD price and match it against the Dogecoin’s price obtained from evaluating simple trend lines on Doge’s performance. One of the more volatile assets in the crypto market is without a doubt dogecoin. In the context of shorting Dogecoin, a margin is a collateral value deposited in the margin account to cover the credit risk involved in buying a meme coin.
Dogecoin is currently trading at $0.0717, and the trader wants to short 100,000 coins. In traditional finance, you must borrow a stock or other asset to sell to another trader. In the CFD market at PrimeXBT, you can take advantage of the price action without all the other extra headaches involved. For example, if you “short” Dogecoin at $0.25 and close the position at $0.21, you have made $0.04 per coin. Alternately, if the price rises, you then lose on the trade. By “shorting” Dogecoin, you are selling it to somebody else with the idea of buying that position back at a lower price.
This lowers the risk to your portfolio since when one position collapses, your other positions aren’t affected. You will have to speculate when the Dogecoin will drop. There are many tools; which will help you to know when Dogecoin falls. The fact that Dogecoin has been falling for so long is one of the most obvious benefits of shorting it. Having said that, there are many justifications for doing so. PrimeXBT Trading Services LLC is incorporated in St. Vincent and the Grenadines as an operating subsidiary within the PrimeXBT group of companies.
How To Short DogeCoin
Shorting a cryptocurrency is the act of selling one that you do not own. Margin trading is inherently more risky than buying cryptocurrency outright, but it allows investors to short cryptocurrency, or bet against it. This way, you can make money as the price of a cryptocurrency like Dogecoin decreases.
Luckily, PrimeXBT offers the CFD market, meaning that you are speculating on the price without taking custody of the actual asset. Volatility is the order of the crypto world, but still, some assets are really volatile; DogeCoin is one of them. In lieu of that, shorting DogeCoin makes more sense than buying it to hold long-term. This article will explain what shorting means, how to short dogecoin, and the risks involved. Do you feel hot enough to toss some memes to the wagging bear?
Margin trading
Dogecoin futures are tradable on the futures markets as financial instruments just the same way equity stocks are traded on the stock market. Many crypto exchange platforms have a futures trade segment where crypto traders can short Dogecoin futures. The underlying asset for this type of futures trade is Dogecoin. Short-selling is one of the most popular options for shorting meme cryptocurrency on the bear markets. In this trading strategy, you wager on the price of Dogecoin expecting it to make a deep slump. Since Dogecoin is a meme cryptocurrency whose face value is based on the popular meme of a Shiba Inu dog, it has no tangible intrinsic value of its own.
When using someone else’s coin, also eliminates a lot of pointless hassles. When you acquire a cryptocurrency via margin trading, your broker loans you money to do so. The primary distinction is that you have to pay interest on the money you borrowed when you practised Margin Trading to buy a cryptocurrency. For arranging the trade, the broker normally only receives a tiny fee when you short a coin. Now, you know what shorting is and how it works, you can tell that it sounds a lot like margin trading.
This is because Dogecoin has no limit to the amount being printed. It would literally take over the financial world at that price. One of the most apparent advantages of shorting Dogecoin is that it has been collapsing for so long.
In addition, counterparty risks are prevented, since Dogecoin futures are issued by the trading platform. A call option is a bullish buyer’s financial instrument while a put option is a bearish seller’s financial instrument. Like other financial instruments, these options can be bought and sold on the crypto markets. Dogecoin can be analyzed either through technical or fundamental analysis. Most people try to approach a typical market using both, but the reality is that Dogecoin doesn’t have a lot of fundamental analysis in the traditional sense.
That being said, there are a multitude of reasons to do so. Knowing this, you realize that Simple trend lines or moving averages are the way to go alongside the complement of basic support and resistance. DogeCoin has fed on hype so much so that even A random Tweet or sporadic mentions on Instagram can have the coin convulsing almost. It is advised that you don’t use too much leverage as that can leave you with losses of up to thousands in U.S. dollars and can also leave you liquidated. You have a 50x leverage opportunity on your principal, which means that should you have $150 to invest, you can invest on a margin of up to $7500.
Type DOGE in the search bar icon, and you will find the DOGE/USDT Perpetual option, the exact option you wish to short. Shorting is essentially the opposite of buying long, which involves purchasing an asset with the expectation that its value will increase. In this article, I will walk you through how to buy Dogecoin and everything you need so as to be set up correctly. In this article I look into the top reasons that many crypto analysts think Dogecoin will fail. This is because Dogecoin relies on excitement to function. Even though this coin has a very low acceptance rate, a single Tweet or Instagram mention causes significant price increases.
Margin trading is a high-risk form of trading whereby one borrows funds, either in fiat currencies or cryptocurrencies, and then uses the funds to buy Dogecoins. Position size matters a lot, especially when making a trade, position sizing is crucial, but it is more important when you are betting against something erratic. Since social media has a big impact on Dogecoin, you should follow the newest trends on Twitter, Instagram, Reddit, and other platforms. When investing in digital currency, keep in mind that it’s just like investing in stocks.
How to short Dogecoin?
That’s it; it is that simple to short Dogecoin on the PrimeXBT platform. Futures also use leverage as the CFD market but typically offer less. Dogecoin futures generally are run by the exchange itself and are not centralized like the Bitcoin futures market in Chicago. In other words, you must trust that the broker matches up genuine orders. There have been some examples in the past of brokers working against their clients. You then use your trading account to short the coin and sell it for a profit later.
Keep in mind that Dogecoin is highly sensitive to social media, which has been the significant driver of Dogecoin in the past to the upside. After all, Dogecoin has rallied based on tweets from Elon Musk and Mark Cuban. The trader then closes out the trade at $0.0517, gaining $0.02 on the trade. By leveraging the trade via CFDs, the margin required was just a bit over $600, while the gain of $0.02 was good for $2000. Unlike other conventional settings, institutional money doesn’t move this market, opening up a possibility of significant price drops.
You’re familiar with the most common rule of investing – Buy an asset(s) at a lower price and sell it at a higher price. But, in digital investing, we have another rule – Sell the asset(s) at a higher price and buy it again at a lower price. The higher leverage you use, the more risk is involved. If you choose to lever your position 100x, then a 1% move will either liquidate your position or return 100%. As you can see from the Dogecoin/USD chart, DOGE has plummeted several times over.
Furthermore, bear markets are interested in short-term gains, not long-term gains that would necessitate fundamental analysis. There are several different ways to do so, but the easiest way will be the CFD market. However, some places offer DOGE/USDT as a pair if you choose to step into the futures market. Unfortunately, futures markets are not as flexible as CFD markets because they are standardized contracts. Depending on the size of your trading account, it may make no sense to use futures.
There are brief opportunities, though, as the market settles. While the platform isn’t as intuitive as exchanges like Coinbase and eToro, the exchange hosts several unique features you can’t get on other platforms. In order to trade on ByBit, your IP address must be located outside of the U.S, as ByBit isn’t available for U.S customers just yet. Keep in mind that trading with margin may be subject to taxation. However, it’s worth noting that what Elon Musk says and what he does are quite often two different things. For example, he continues to sell Tesla stock every time it rips higher.
Simple trend lines or moving averages are often used, along with basic support and resistance. This is because most of what drives Dogecoin is simply hype. A random Tweet, mentions on Instagram, or other social media platforms have seen Dogecoin react violently, even though adoption is extraordinarily minimal. In fact, as of 2022, there are less than 500 places on the planet where you can spend Dogecoin. Even though there has been a lot of money made shorting Dogecoin, you cannot say that it’s something that comes without risk. To short DogeCoin, you will need to purchase the USDT Tether stable coin for your futures contract.
