What is short selling in crypto?
Short selling is a trade that profits when the price falls. You open a short at today's price, and if the price drops you close it lower and keep the difference. Losses are the mirror image: every rise costs you, and because a price can keep rising, the loss has no natural ceiling.
From the Staxo crypto glossary. The examples use Kraken daily candles (UTC), Oct 10, 2025 to Oct 10, 2026, for the eight coins on Staxo's free plan that are not stablecoins.
How a crypto short works
In the stock market, a short seller borrows shares, sells them, and buys them back later to return them. In crypto, most shorts are opened through derivatives such as perpetual futures or margin trading: you open a position that gains when the price falls, without ever owning the coin.
The result of a short is the mirror of a long: position size × (entry price − exit price) ÷ entry price. A $100 short on Bitcoin opened at the Oct 10, 2025 close of $113,000 and closed at the Oct 10, 2026 close of $82,913 would have made $26.63. Real exchanges also charge borrowing or funding costs on shorts, which this calculation leaves out.
What a $100 short on each coin did in 12 months
| Coin | Result | Days the price fell | Highest close vs start |
|---|---|---|---|
| Cardano | +$62.03 | 214 | +11.3% |
| Dogecoin | +$55.82 | 207 | +10.4% |
| Solana | +$41.75 | 192 | +10.5% |
| XRP | +$40.99 | 209 | +11.5% |
| BNB | +$36.30 | 181 | +10.8% |
| Ethereum | +$34.74 | 183 | +10.6% |
| Bitcoin | +$26.63 | 190 | +1.9% |
| TRON | -$2.91 | 174 | +16.8% |
In a year in which 7 of 8 coins fell, a short held from the first day to the last gained on most of them. The exception was TRON, where the short lost $2.91. Even so, the price closed higher on a large share of days for every coin, and each of those days cost the short money before the fall came.
Why a short is riskier than a long
A long can lose at most what you paid, because a price cannot fall below zero. A short has no such floor on the loss: if the price doubles, a 1x short loses 100%, and a price can rise further than that. When many shorts are forced to buy back at once, the buying itself pushes the price up, which is called a short squeeze.
With leverage the risk comes sooner. A 5x short is liquidated after a 20% rise from its entry. In this falling year, a 5x short on Solana opened at a random daily close was still liquidated within 30 days 16% of the time, because the fall came with sharp rallies along the way.
How to practice it in Staxo
Staxo Pro includes short selling at 1x, 2x and 5x on top of the demo balance, and every open position shows its liquidation price and how far away it is. That makes it a safe place to learn how a short feels when the market moves against you.
On the free plan you can practice the decision behind a short without the position itself: sell a coin you hold when you expect a fall, write down the price, and see whether you would have bought it back lower. Pro is $1.99 for the first month, then $8.99 a month or $59.99 a year.
Free on iPhone and Android, $500 in demo money. Also on Google Play.Also on the App Store.
Short selling questions
Can I practice short selling for free?
Short selling in Staxo is part of Pro, which costs $1.99 for the first month, then $8.99 a month or $59.99 a year. Every trade is with demo money, so a short that goes wrong costs you nothing real. The free plan covers buying and selling 10 coins with market orders.
What happens to a short if the price goes up?
It loses money in proportion to the rise: at 1x, a 10% rise costs 10% of the position. With leverage the loss is multiplied, and once it equals the margin the position is liquidated, after a 20% rise at 5x or a 50% rise at 2x in Staxo.
Try it with $500 in demo money.
Free download, no card. Also on Google Play.Also on the App Store.
Educational content, not investment advice. The examples describe prices from Oct 10, 2025 to Oct 10, 2026 and say nothing about where they go next. Staxo is a simulator: you practice with demo money, never real money.