What are the risks of shorting a digital currency on an OTC stock?

3 answers

• Nov 28, 2021 · 3 years ago
  Shorting a digital currency on an OTC stock exchange can be risky due to the lack of regulation and oversight. OTC markets are less transparent and can be prone to manipulation. Additionally, the liquidity of digital currencies on OTC exchanges may be lower, making it difficult to execute trades at desired prices. It's important to thoroughly research the OTC exchange and the specific digital currency before engaging in short selling to mitigate these risks.
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• Nov 28, 2021 · 3 years ago
  Shorting a digital currency on an OTC stock can expose you to potential losses if the price of the currency increases instead of decreasing. OTC markets are known for their volatility, and sudden price movements can result in significant losses. It's crucial to have a well-defined risk management strategy in place and closely monitor the market to minimize the impact of adverse price movements.
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• Nov 28, 2021 · 3 years ago
  Shorting a digital currency on an OTC stock exchange carries the risk of counterparty default. Unlike traditional exchanges, OTC transactions are often conducted directly between buyers and sellers, without the involvement of a clearinghouse. This means that if the counterparty fails to fulfill their obligations, you may face challenges in recovering your funds. It's advisable to only transact with reputable and trustworthy counterparties to reduce the risk of default.
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