Typical Dogecoin: Pump is followed by dump. But profits can also be made from price falls – for example with futures or leveraged tokens.
Especially with the Dogecoin meme coin, there are always heavy pumps
But what goes up quickly, often lands back on the ground all the faster. A fact from which Dogecoin shortsellers benefit. Here are three ways in which you can bet against the Dogecoin course.
Futures – also known as futures contracts – are a popular instrument to hedge against a price drop or to speculate on a price crash (see Gamestop-GAU ). An underlying asset such as gold, rice or a (crypto) currency is not traded directly. Rather, a futures contract is a purchase agreement. It specifies the number of units of an asset that will be bought or sold, as well as the price and when the asset will change hands.
Since the value of this purchase agreement is derived from the price of this underlying, futures are referred to as derivatives
Settlement of the contract occurs when it reaches its expiration date. Then either the underlying changes hands or the difference between the current price of the underlying and the futures contract is settled in cash (cash settlement). Often times, traders sell their positions before the expiration date.
The buyer of a future is on the long side: he hopes that the price of the underlying asset has risen over the term of the contract. The seller is accordingly on the short side: he profits when the underlying asset loses value – he “shorts”. Particularly in the case of extreme price movements, as is currently the case with Dogecoin (DOGE), returns can be made with futures trading – regardless of the direction in which the needle goes. In addition, there is the possibility of using leverage to multiply both the prospects for profit and the risk of loss.