All across the crypto market, there were mass liquidations last month, when Bitcoin closed one of its worst monthly candles on record. Altcoins took an even worse beating, wiping out more than $1 trillion from the total crypto market cap.
Realized loss metrics using the Bitcoin blockchain show that retail investors took the brunt of the losses, while institutions took profit on short-term positions. Meanwhile, a small subset of traders were actually able to profit from the catastrophic crypto market crash, and there’s even proof of their incredible market savvy and survival skills.
How they did it all comes down to one simple trick: short selling. Fortunately, because these traders are on Covesting, others can follow these traders and even copy their successful trades. Here’s how.
What Is Covesting?
Covesting is a peer to peer copy trading module and trading community all in one. The copy trading module is found on the award-winning trading platform, PrimeXBT, as part of a B2B partnership. PrimeXBT licenses the software from a Europe-based DLT developer by the same name.
Using Covesting, users can elect to become a follower or a strategy manager. Followers can follow strategy managers and copy their trades, while strategy managers can trade as they would normally, but can leverage follower capital for larger positions sizes.
Strategy managers also get a cut of the success fees generated by successfully closed copied trades, so there’s always incentive for strategy managers to perform at their very best.
Followers get to pick from the ranks of the fully transparent Covesting global leaderboards, which include a wealth of success and risk data related to each strategy. Followers can use the intel to make the right decisions on who to follow, but can skip having to manage positions themselves and can rely on someone else with more experience in markets.
These traders use their experience to know when to go short and profit from a trend reversal.
What Is Short Selling?
With investing, there is only buying and selling assets. When an uptrend concludes, investors must cash out as close to the peak as possible, and prevent losing gains during a downtrend.
Going short, or short selling, involves opening a position expecting the price of an asset to go down. It allows traders to speculate on price action, and profit from when markets are falling instead or rising.
Traders often go short at resistance to hedge long trades or a spot position, or short the breakdown of a chart pattern or trading range to ride the breakdown to new lows. The opposite of a short position is a long. Traders on PrimeXBT can go short or long the market on more than 50 different assets via CFDs, also called contracts for difference.
When a trader opens up a CFD position, the profit or loss is related to the difference in cost when the contract is closed. Had the Covesting strategy manager been long, using tools like stop loss orders still could have been protected.
How Covesting Strategy Managers Went Short Bitcoin
Even in the aftermath of the great crypto crash of 2021, Covesting traders had profits to show via the transparent leaderboard metrics. Many had more than 300%, with one standout trader with more than 8,000%, who clearly knows the value of short-selling Bitcoin and other cryptocurrencies at resistance.
When Bitcoin was struggling with highs around $60,000, technical indicators became highly overbought, and there were significant bearish divergences. Traders well versed in the free technical analysis tools offered by PrimeXBT were able to see the trend change coming, and get prepared.
By going short Bitcoin at the first sign of weakness and placing a stop loss above resistance, Covesting traders were able to stay profitable while the rest of the market bled out. And because retail traders and investors were hit the hardest, they might want to consider becoming a follower on Covesting, and instead let those with more skills and experience navigate the market.
Shorting Bitcoin will become even more profitable if the long term trend turns fully bearish. Only time will tell, but those short positions might be even more profitable than anyone ever expected.