Bitvavo Introduces Short Selling

European crypto exchange Bitvavo has launched a new feature that allows users to short sell cryptocurrencies. This means traders can now make money when crypto prices go down, not just when they go up.

At the moment, Bitvavo supports short selling for a limited number of major cryptocurrencies. These include Bitcoin (BTC), Ethereum (ETH), XRP, Solana (SOL), and Cardano (ADA). The feature is being rolled out gradually, so not every user will see it immediately.

Short selling can be useful, but it also comes with high risks. This article explains how short selling works, how Bitvavo handles it, what the costs are, and why this strategy is not suitable for everyone.

What is short selling?

Short selling is a way to trade when you expect prices to fall.

Normally, investors buy an asset first and sell it later at a higher price. With short selling, the process works the other way around.

Here is how it works in simple terms:

1. You borrow a cryptocurrency from Bitvavo.

2. You sell it immediately at the current market price.

3. If the price falls, you buy the same coin back at a lower price.

4. You return the borrowed coin to Bitvavo.

5. The price difference is your profit, minus fees.

Example

Imagine Ethereum is trading at €2,500.

• You borrow 1 ETH from Bitvavo.

• You sell it for €2,500.

• The price drops to €2,000.

• You buy back 1 ETH for €2,000.

• You return the ETH to Bitvavo.

Your gross profit is €500, before costs.

Why short selling is risky

Short selling can be profitable, but it is also very risky, especially in crypto markets.

Cryptocurrency prices move fast. Even during market downturns, prices can suddenly rise by 10% or more in a short time. These sharp price jumps can quickly turn a short position into a loss.

There is also an important difference between buying and short selling:

• When you buy an asset, the maximum loss is your investment.

• When you short sell, losses can grow quickly if prices rise.

That is why short selling is usually used by experienced traders, not beginners.

How Short Selling Works on Bitvavo

Bitvavo has made the process relatively simple, but there are strict rules.

To open a short position:

1. Choose a cryptocurrency, such as Bitcoin.

2. At the bottom of the screen, select “Short Sell”.

3. Enter the amount you want to short.

Knowledge test required

Before you can open your first short position, Bitvavo requires you to pass a knowledge test.

This test checks whether you understand:

• how short selling works,

• what the risks are,

• what liquidation means.

If you do not pass the test, you cannot use the feature.

Collateral: how Bitvavo limits risk

To short sell on Bitvavo, you must provide collateral. Collateral is money that acts as a safety buffer in case the trade goes against you.

Bitvavo requires:

• 100% collateral for the amount you want to short.

• The collateral is held in euros.

• If the crypto price rises, losses are taken directly from your collateral.

• The money you get from opening the short position, is also locked at Bitvavo.

What is a liquidation?

If your collateral becomes too small to cover losses, Bitvavo will automatically close your position. This is called liquidation.

When this happens:

• your position is closed at the current market price,

• most or all of your collateral is lost,

• extra liquidation fees apply.

The maximum loss is limited to your collateral. This means you cannot lose more money than you put in.

No option to add more collateral

A key difference with some other trading platforms is that Bitvavo does not allow you to add more collateral once your position is open.

If the market moves against you, you have only two choices:

• close the position yourself, or

• wait for automatic liquidation.

This makes risk management very important.

Position Limits

Bitvavo also sets clear limits to reduce risk:

• You can short sell up to €50,000 per cryptocurrency.

• Only large and liquid cryptocurrencies are supported.

• The money you receive from selling the borrowed crypto is locked and cannot be used for other trades.

This locked amount, together with your collateral, is used to buy back the cryptocurrency when the position is closed.

What are the costs?

Short selling is more expensive than regular buying and selling.

1. Trading Fees

You pay Bitvavo’s standard trading fees when opening a position. These start at 0.25%, depending on your trading volume.

2. Borrowing fees

Because you borrow cryptocurrency, you also pay borrowing fees:

• Fees vary by asset.

• They are calculated per hour.

• The longer the position stays open, the higher the cost.

3. Liquidation fees

If your position is liquidated automatically, Bitvavo charges an additional 2% fee.

Who is short selling for?

Short selling is not suitable for beginners.

It requires:

• experience with active trading,

• strong emotional control,

• a good understanding of market movements.

For most retail investors, a long-term strategy is usually safer.

Conclusion: a powerful tool, but with serious risks

By introducing short selling, Bitvavo is expanding its platform for advanced traders. The feature allows users to profit from falling prices while keeping losses capped through strict collateral rules.

However, short selling remains a high-risk strategy. Anyone who does not fully understand how it works can lose their entire collateral very quickly.

For experienced traders, it can be a useful tool.
For everyone else, caution is strongly advised.