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Silver price forecast 2020 and beyond
Investors have always understood the allure of precious metals, with gold taking the crown. But what about its equally shiny cousin, silver? We look at where silver’s price could be heading in 2020.
Investors have always understood the value of silver
. Not only has the precious metal been used for trading for 5,000 years, it has even acted as coinage for many countries. Indeed, the UK’s currency owes its very name to silver. A pound coin originally weighed one troy pound of sterling silver, so it became known as a “pound sterling”.
But is silver still a good investment choice today? And will the silver price forecast for 2020 be favourable?
Silver and gold
Often unfairly dubbed ‘poor man’s gold’, silver has always taken a back seat to its more valuable metallic cousin. With gold currently trading at $1,477.80 (£1,145.11) per ounce, while the same weight of silver trades at $17.14, there is clearly a huge disparity in their relative values.
Fortunately, there are huge advantages in silver being the cheaper option. Not only is it a more affordable choice in the jewellery sector, but it also has the benefit of being highly sought after by numerous other industries too.
Like gold, silver is ductile with excellent thermal and electrically conductive properties, making it invaluable to the electronics industry. What’s more, silver’s use in industry has grown significantly in recent years.
Currently, almost half of all silver produced is used for industrial and technological purposes. The metal can be found in anything from printable electronics to conductors and catalysts. The automotive industry uses it for silver-coated contacts and it is to be found in almost every computer and mobile phone.
And while the growth of digital photography has drastically reduced silver’s use in the photographic industry, the metal has found new markets through its use in the manufacture of LED chips, RFID chips (used for tracking parcels worldwide), touchscreens and photovoltaic cells (used in solar energy).
What’s more, silver is extremely good at killing bacteria, and therefore of benefit to the medical industry. Not only is it used in equipment and bandages, but it has also been used to combat dangerous “superbugs” that have grown resistant to antibiotics.
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No wonder the Silver Institute calls it “the indispensable metal”.
Silver production and consumption
Mexico is the world’s leading producer of silver, extracting 19 per cent of the global output from its mines. China and Peru follow with 15 per cent each.
As for consumption, the US leads the way, using 21 per cent of the world’s silver – between six and eight thousand tonnes per year. It is followed by China, Japan and India with Germany and Italy being Europe’s major silver consumers.
The price of silver tends to move in a similar way to that of gold, albeit a little more slowly. Investors often observe that when gold hits the headlines, silver soon follows suit. However, as silver is a very small market, any financial change to the industry can have a greater effect on its price and it is more volatile than gold. Silver’s price does tends to fall much further than gold’s, but it can also rise more quickly and substantially in a bull market.
Silver’s price history
Commodities such as gold and silver have long been viewed by investors as safe havens in times of political or economic turbulence. A weakening dollar increases the value of other currencies, which increases the demand for commodities such as silver and drives up the price. So when the dollar is weak, the price of commodities moves higher.
During the financial crash in 2008, silver rallied from its price of $12.24 per ounce on September 6, 2007, to $20.22 by March 2008. After a correction, the market then saw silver rocket to a 31-year-high of $48.70 on April 28, 2020.
Terry Hanlon, president of precious metals trading firm, Dillon Gage Metals, told the UK’s Telegraph newspaper at that time: “Many commodities have climbed because of expectations that improving national economies will boost demand for materials. And with most commodities prices in dollars, the greenback’s decline against other currencies made raw materials cheaper for foreign investors to buy. US investors bought silver and gold as a way to hedge against further erosion in the dollar’s buying power.”
Indeed today many investors view silver less as a safe haven than as a hedge against inflation and an insurance policy against global volatility.
Silver price prediction
Silver has been in something of a bear market since 2020, with many analysts now reckoning on a positive silver price forecast as it is well overdue a rally.
Chris Gaffney, president of world markets at New York based TIAA Bank told Marketwatch in July, “Gold has had a pretty good head start on silver during the first half of 2020”, but added that, “silver will outperform gold for the rest of the year”.
Factors affecting future silver price predictions
Of course, many factors affect the price of commodities such as silver. Fluctuation in supply and demand has a clear impact. With constant demand but a dwindling supply, silver will become increasingly valuable.
Concerns regarding the Trump administration have seen many investors returning to silver and gold, while geo-political disputes such as the US-China trade war and Brexit also drive price change.
For example, silver saw its price rally to $19.30 per ounce on September 4, likely due to uncertainty regarding the US-China trade deal. In contrast, a strong US dollar, coupled with the US Federal Reserve raising interest rates four times in 2020, resulted in silver’s price dropping by almost 14 per cent over that year.
Silver price forecast
Despite the price falling to $17.14 per ounce on November 20, the silver price forecast from many analysts for 2020 is mildly bullish – based on the view that it has bottomed out and is on its way up.
Johan Wiebe, analyst at Thomson Reuters believes silver will reach $17.50 per ounce in 2020. Colin Hamilton of Bank of Montreal, reckons we could see $18.60, while European precious metals retailer, Degussa, goes as far as to suggest $23 per ounce.
Silver investment forecast
But some are more bullish than others. Keith Neumeyer, CEO of First Majestic Silver, told Kitco News in 2020 that he considers silver to be under-rated and under-valued in comparison to other metals. Describing silver as a “strategic metal, needed for all sorts of applications”, he believes we could see prices of $130, and perhaps even $200 per ounce in the future. Neumeyer also expects a steady increase in mining efficiency over the next 10 years, which will be reflected in silver’s value.
Both gold and silver have rallied since the Federal Reserve cut rates for the third time in October 2020. EB Tucker, director at Metalla Royalty & Streaming, predicts that as gold has started to rally, “at some stage silver wakes up and plays catch up. That’s a move worth owning,”. He adds: “We could easily see $20 per ounce.”
Silver’s price in the next 5 years
Looking ahead, agency Longforecast.com considers the long-term silver forecast. While they see the precious metal’s price steadily rising to a high of $22.69 per ounce by July 2020, they believe it will then decrease and fluctuate within the $18-$20 range between the end of 2020 and 2024.
Silver future price: Should we buy?
One tool analysts use is the Gold:Silver ratio. This sets out silver’s price in relation to gold. If it costs $30 for an ounce of silver and $1,200 for an ounce of gold, the ratio is 40:1.
As it is estimated that there is 17 times more recoverable silver than gold, the general ratio is 17:1. So we can see that the higher the ratio, the more cheaply the market prices silver in comparison to gold.
Some investors believe it can be considered a good time to buy silver when the ratio exceeds 80. So with the ratio at almost 87 on November 20, should we all now be jumping in?
Tokenised securities and ETFs
Investors wishing to have some silver exposure don’t have to buy bullion. A low-cost way to invest can be via an exchange traded fund (ETF) that tracks the price of silver in an index, such as the MSCI ACWI Select Silver Miners Investable Market Index.
Alternatively, investors can buy tokenised securities from companies such as currency.com. By swapping cryptocurrency or fiat cash for tokenised securities investors can buy as much or as little silver as required. Using blockchain technology means the settlement is in real time, making tokenised commodities quick, easy and cheap to trade.
We can see that the demand for this versatile metal is growing. Not only does each of the one billion mobile phones produced globally require one third of a gram of silver, but the demand for solar panels using silver as a conductive ink is also rising.
Despite growing demand and market watchers’ belief that silver is overdue a rally, few seem to believe the metal will increase to quite the extent suggested by Neumeyer. Nonetheless, with growing economic and political turmoil taking their toll on the dollar, silver could still be worth adding to our portfolios.
A Silver Price Forecast For 2020 And 2021 *Corona Crash Update*
We see a mildly bullish 2020 with a silver prediction of $22, but a wildly bullish 2021 with a prediction of $28
We consider our annual silver price forecast one of those important forecasts because of our track record in forecasting silver prices. According to our latest silver forecast as well as our gold forecast we predict a new bull market. However, this is not a raging bull market, it is in an early stage in 2020 and might start picking up in 2021. Silver’s price has an upside potential of 30% ($22/oz) in 2020, and an upside potential of 65% ($28/oz) in 2021. That’s against prices at the time of writing around $17.50. The prerequisite is that silver’s COT report shows signs of a bull market, and that Pring’s inflation indicator picks up again. Our 2020 forecast for silver is mildly bullish while our 2021 forecast is wildly bullish with a big spike. We consider this silver price forecast to be one of the must read forecasts of InvestingHaven’s research.
[ Corona Crash Update posted on March 20th 2020 . Please scroll to the bottom to find the most up-to-date silver price chart as well as insights to our forecasts after the Black Thursday and Black Monday crashes in March of 2020.]
As a first general thing we have to point out a very common misconception. Investors tend to think that silver is bullish most of the time. Nothing is further from the truth.
The important misconception is that silver is exceptionally bullish. Most of the time it is bearish or neutral. However, those few times that it turns bullish it does so on steroids. “Once bullish, extremely bullish,” is what characterizes silver.
This is another illustration of Tsaklanos his 1/99 Investing Principles: it is only 1% of the time that silver is wildly bullish. The remaining 99% of the time silver is flat to bearish.
Why This Silver Price Prediction?
What we are really (only) interested in is to catch these major moves in silver. That’s the reason we we will continuously update this silver forecast throughout 2020 and 2021.
We are on the lookout of markets that become a multi bagger in 6 to 9 months time. It is our official mission, formalized at the start of 2020. We call it our Mission 2026, and we even have a target for this: we want to turn $10k into $1M the latest in 2026 by having the best forecasts and associated trades.
Based on the elements in this article we conclude that the likelihood of silver setting some spikes in 2020 and 2021 is high. Timing will be crucial, and precision will be of the highest importance!
We strongly recommend readers to check in often, and follow all our articles and forecasts.
Our Silver Price Forecast for 2020 and 2021
Let’s start with the conclusions of our silver price forecast for 2020 and 2021. Readers who don’t want to understand our underlying forecasting method can ignore the rest of the article.
Silver is a new bull market, period.
Based on the long term charts which show silver’s dominant patterns we expect this new bull market to continue for some 8 years. That’s the same time the bear market took to complete.
InvestingHaven’s research team is the first one to publish a new rising channel on silver’s price chart. It is the core of our silver predictions for 2020 and 2021. This goes to the core of forecasting: seeing what others cannot see !
In 2020 we will see a slow slope of the rising channel. This may accelerate temporarily in 2021. Bull markets accelerate slowly but surely.
We look at leading indicators in the COT report and inflation indicators to get a sense of the timing of the spikes in 2020 and 2021.
Our Silver Price Forecast for 2020 and 2021
Based on the leading indicators and more importantly the chart setup we see the following silver price forecast for 2020 and 2021.
This is our forecasted silver price for the coming years. Prices reflect silver’s spot price.
|Year||Silver price forecast||Conditions||Invalid|
|2020||Mildly bullish, spike at $22||Dollar soft, gold strong, inflation bottoms||Silver falling back to its breakout level at $15|
|2021||Wildly bullish, spike at $28||Dollar soft, gold strong, inflation bottoms||Silver falling back to its breakout level at $15|
Silver Price Forecast Now Underway (edit: Feb 9th, 2020)
Ed. note: This is paragraph (only) was added on Januardy 3d, 2020, and next edited on February 9th, 2020.
Today, at the start of the 2nd trading day of 2020 we get a confirmation of our bullish silver forecast written many monts ago.
We explained in our gold forecast that gold now confirmed its bullish trend for 2020. Consequently silver follows gold’s path higher!
Some say this is due to fear, other due to political and other tensions.
We say all this is b*****t because markets move higher if and when they are ready to go higher. The news is just the ‘excuse’. Without that news event there would have been another ‘alibi’ to move higher around the same time period.
Similar to gold we see a new bullish pattern is born on silver’s chart: the green channel on below chart. Needless to say this is a very bullish ‘event’.
More interestingly we see that this channel lines up to our projected silver price target of $22 for 2020. Based on the timeline associated with this pattern we expect silver to touch $21 to $22 by April of 2020 after which a cooling off period might follow.
Ed. note: Sign up to our ‘momentum investing’ premium service to known when we believe it is time for gold and/or silver trades. Note that we took a silver trade in 2020 that delivered +80%, one in December/January that delivered 4%, and then got out because market conditions suggested to wait a bit with our next silver trade. However, we are sure a new silver opportunity is underway, so stay tuned with our momentum investing premium service which covers among many other markets also the silver market.
Leading Indicators for our Silver Price Predictions
We have been successful forecasting silver prices in recent years.
To illustrate this we go back to April of 2020 where our silver price forecast was published on MarketWatch: Silver has peaked for the year. We were spot-on. The set of circumstances were not in favor for a strong year in gold nor silver.
In May of 2020 however we were very vocal and convinced about a gold and silver price breakout, and said so in Why gold’s a ‘bargain’ at less than $1,300 an ounce which was published on MarketWatch. Even Barron’s picked up our forecast, and featured it on May 3d: How Gold Could Stage a 20% Rally This Year.
Those silver price predictions are accurate because silver has a number of reliable leading indicators for its future price.
One very reliable leading indicator is the inverted Dollar correlation, though this is a directional indicator. It works on a secular level, not on a day-to-day level. This is an important misconception for many investors!
Similarly, the inflation vs deflation indicator works in a similar way.
One of the most reliable leading indicators for the future price of silver is the silver futures market COT report.
The way to understand this indicator is that it signals a bottom or top when hedge funds have extremely low or high positions. The shape of the subsequent change in net positions is what helps understand whether there is a bull market or bear market in the price of silver.
We look at all those leading indicators, combine it with silver’s chart patterns, and use this as the input for our concrete silver price prediction.
Note that articles like the ones outlining 10 reasons to invest in silver have no added value as leading indicators. It is nice entertainment but be sure that silver price forecasting has nothing to do with inventories, cheap vs expensive arguments, etc. Similarly, whatever hedge fund or financial institution being bullish on silver has no value when it comes to silver price forecasting.
Leading Indicator: Silver COT
When it comes to the silver COT report we look at extreme net positions of non commercials. Every time non commercials are in the 60,000 to 80,000 contracts net long it tends to signal a major peak in silver’s price.
When it comes to the extreme low level of net long contracts by non commercials we see 2 potential scenarios:
- Either their positions drop close to zero. This comes with a serious price drop. It tends to happen in a silver bear market.
- Either their positions drop but remain significantly positive as the price correction ends. This tends to happen in a silver bull market.
After silver’s major peak in 2020 we saw many drops of silver’s price close to zero for both non commercial and commercial traders. The ultimate test for 2020 and 2021 will now come soon, and we expect silver’s price correction to come with a significantly higher number of contracts for traders.
All data points mentioned above are visible in the center panel of below chart.
Leading Indicator: Silver to Dollar inverted directional correlation
The 2nd leading indicator for silver’s future price is the Dollar inverted correlation.
The next chart shows the Dollar in light grey, but it is inverted. That’s because it is easier to follow the correlation.
In the last 2 decades the silver price chart has tracked the price of the Dollar (inverted) with just 2 exceptions (2020/2020 and 2020). Those exceptions only tended to last 9 months.
That’s exactly why our point is that both markets track each other (inverted) directionally .
Right now we tend to see a wide range in which the Dollar trades. As long as the Dollar remains in this range it will not hinder silver to move higher, every time the other leading indicators are supportive. That’s the way to read this chart and make it insightful for silver’s future price.
Leading Indicator: Silver to Inflation directional correlation
The next leading indicator appears to be highly reliable in forecasting the price of silver.
In particular the inflation / deflation indicator from Pring appears to have a very strong positive correlation with silver. Again, this is a directional indicator, and we look at the secular trends (not the day-to-day or week-to-week trends).
The inflation / deflation indicator in light grey on below chart is in the process of setting a major double bottom. Look at the two green circles at the bottom.
Note how this double bottom did coincide with the test of secular support in the price of silver. Almost at the same time did the inflation indicator and the price of silver bottom.
Whether the recent silver price breakout is forecasting inflation to go up, or vice versa, does not really matter. At least, that’s what we believe.
What matters to us is that both markets bottomed, and that silver already broke out in the meantime. With this it ended its 8 year bear market, almost in the same week after it peaked in 2020 (first week of May)!
The price of silver is in a new bull market, period.
The only question that matters is how fast silver will rise. Given the fact that it is in a new bull market, early stage, it will go up slowly. The acceleration phase follows later.
The Longest Silver Price Chart (50 years)
If we continue the rationale from the previous sections we can see a beautiful setup on the longest chart timeframe. This may feel too classic, and as many silver investors nowadays prefer to look at the silver price on the shorter term charts. But remember the dominant trends are only visible on the longest timeframes so serious investors always have to respect the top down approach when it comes to silver price analysis.
Below is the 50 year silver price chart. This a quarterly (!) chart so it is meant to read the most dominant trends.
We believe this chart contains a wealth of insights. It is especially useful for our silver price forecast for 2020 and 2021 .
Let’s review them one by one:
- The recent silver price breakout is meaningful. Hence, we expect this to morph into something powerful, even though it will need some time.
- The 8 year decline since the peak in 2020 looks like a mini version of the decline that followed the peak of 1979. We see this giant bottom formation between 1979 and 2020. The pattern in the last 8 years looks like a minified version of it.
- Consequently we can expect silver to take another 8 years to peak again at $50, where it will set a triple top. This will clear the way to move higher. That’s certainly not for 2020 and 2021, no matter if some analysts tend to be overly bullish. ‘It ain’t gonna happen’ that fast!
- In the last 5 decades investors wanted to be invested in silver only 4 times (green shaded areas)! That’s right, there is a lot of talk about silver’s profit potential. But the upside potential should not be mixed up with the time duration in which it rises. High potential, but most of the time bearish or flat, and only exceptionally bullish. “Once bullish, extremely bullish,” is what characterizes silver.
All that said we don’t expect one of those giant moves to take place in 2020 or 2021.
We have to point out one thing as we talk about only a few really big moves. It is a common pitfall to hit one of those moves, and then fall in love with silver. This is dangerous. As per the unusually successful investor Stan Druckenmiller:
It is not whether you are right or wrong that is important, but how much money you make when you are right and how much you lose when you are wrong.
Don’t argue on silver, but ensure you get the investment right.
We have to zoom in to get some more meaningful insights for price targets in 2020 and 2021. For this we look at the monthly chart on 20 years, see below.
Silver Chart and Price Targets
Let’s now combine the findings of our leading indicators, the observations on silver’s long term chart above (50 years) with the monthly silver chart on 20 years.
Here it becomes interesting.
We are on record forecasting a new rising channel, one that is indicated with the green dotted lines on below chart.
As silver ended its 8 year bear market it started an 8 year bull market, is our long term silver forecast. This will not be 8 straight years of double digit or even triple digit rises. Things will start slowly, only to accelerate later on.
The new rising channel points to $22 in 2020 and $28 in 2021. Note that these are spikes, and prices will retrace after hitting those peaks.
The leading indicators, especially the inflation indicator as well as the COT report in the silver market will determine when those spikes to our price targets will take place.
In 2021 we expect one or two bullish moves, when the COT report shows that the non commercials stop decreasing their net long positions. Similarly, inflation expectations should be on the rise in that same time period. It’s the perfect recipe for a strong move in precious metals, especially in silver.
We keep a close eye on the flipside of this bullish story. Bearish momentum will pick up once silver falls back below $16 in which case it will fall to $14 again. Not likely to happen, but the flipside always has to be considered by investors!
Corona Crash Update on March 22nd, 2020
This paragraph and below charts contain an up-to-date version of the long and short term silver price charts. We wrote this update on March 22nd, 2020, at the depth of the Corona crash.
First the 50 year silver price chart.
The silver quarterly chart now has this huge ugly candle in the first quarter of 2020.
However, silver stopped falling really at support that goes back to 2008, and that’s also resistance in 1982. In essence silver’s 12 USD is the breakout point after the 2 decade long giant reversal. This is a promising thing.
Next is the 7 year chart.
With silver’s recent crash there is clearly damage on this timeframe of silver’s price chart.
However we believe what we read into this is a giant reversal that connects the Dec 2020 sell off with the recent lows. This should have a good outcome even though there is resistance to overcome at 14 USD.
Last but no least the daily chart.
This is a close up that shows how fast this decline happened. The 2 red circles are critical price levels, and they were violated in less than 5 trading days. Never seen, unimaginable, but true.
The 14 USD will act as resistance in the short to medium term, but silver clearly will rise back to 16.50 and ultimately 18.50.
We believe that our 2020 and 2021 silver price forecasts may be delayed with one year.
However, silver investors should keep a close eye on 14.50 as well as 16.50 USD. The pace at which both these 2 levels will be cleared will inform is whether our silver forecasts will be delayed or not.
Best case scenario the 14.50 and 16.50 get cleared fast, and our silver price forecasts are still intact.
Worst case the 14.50 and 16.50 cannot get cleared in 2020, and our silver price forecasts are delayed with one year.
Results of our previous Silver Predictions
As said before we have a track record of forecasting gold and silver spot prices. The table below is based on the forecasts made in prior years, both on our own website in the public domain and even on financial mainstream sites.
This is an overview of our silver price forecasts from last year. We publish these forecasts many months prior to the year that we forecast. Prices reflect silver’s spot price.
|Year||Our silver forecast||Highs||Lows||Forecast accuracy|
|2020||Neutral, price target of $15||18.65||14.41||Spot-on|
|2020||Neutral, no breakdown||17.68||13.91||Spot-on|
|2020||Bullish with price target of $20-21||19.64||14.30||Spot-on|
Silver Predictions by other Analysts
Interestingly, quite some silver price predictions have been published by analysts in the field. Most of them have a similar price target, there is only one from First Majestic Silver’s CEO that looks really unrealistic.
We will update this list of silver price predictions throughout the year!
This is an overview of forecasted silver prices for 2020 by other analysts. We don’t support these forecasts, we just share them to illustrate how other analysts think about a silver price forecast for 2020 and beyond.
|Year||Analyst||Silver price prediction|
|Silver price forecast 2020||InvestingHaven’s research team||Bullish bias, spike to $24. In 2021 spike to $28.|
|Silver price forecast 2020||Keith Neumeyer, CEO of First Majestic Silver||$130|
|Silver price forecast 2020||Colin Hamilton, Bank Of Montreal||$18.60|
|Silver price forecast 2020||RBC||$17.50|
|Silver price forecast 2020||Degusa||$23|
|Silver price forecast 2020||Gov Capital||Below $20|
|Silver price forecast 2020||EB Tucker, director Metalla Royalty & Streaming||$20|
|Silver price forecast 2020||Johann Wiebe, Thomson Reuters||$17.50|
|Silver price forecast 2020||Goldman Sachs||$18|
|Silver price forecast 2020||Michael Widmer, Bank of America||$17.54|
|Silver price forecast 2020||Commerzbank||$18.50|
|Silver price forecast 2020||Survey of analysts by the LBMA||$18.21|
|Silver price forecast 2020||Bullion By Post||$20.44|
|Silver price forecast 2020||Craig Hemke||$22|
Silver Forecast Log: Weekly updated throughout 2020
This is a (bi-)weekly log to keep track on our silver forecast. We update this on (bi-)weekly basis throughout 2020 with in a bullet style with highlights of the week/month as it relates to our silver projection for 2020 and going into 2021.
- First week of January: the silver market is on track, exactly in line with our silver forecast for 2020. We expect more strength in January of 2020. Our projected price of $22 may be met by end of April after which a cool down period might follow.
- Second week of January: great start of the week for the price of silver.
- January was a choppy month for silver. It broke out, came down, broke out and came down again.
- For February 2020 we suggest to stay sidelined. There is no real trend right now so it’s better to wait-and-see.
Detailed Follow Up on our Silver Forecast (free forecasting email newsletter)
We absolutely recommend to subscribe to our free newsletter in order to receive future updates. We publish updates on our silver forecast. But we also do publish other forecasts.
We continuously, throughout the year, publish updates on our annual forecasts. Any revision in our forecast are published in the public domain and appear in our free newsletter. Therefore, the only way to track the pulse of markets and stay tuned with our forecasts is to subscribe to our free newsletter >>
Must-Read 2020 Predictions from InvestingHaven’s Research Team
We absolutely recommend to read the following predictions as they are highly informative and very well researched.
Profit from The Falling VS Rising Market: going short and going long
One of the biggest advantages of trading cryptocurrencies is their volatility. However, volatility means that things go both up and down. Traders need to take this into consideration, and learn how to trade both falling and rising markets.
With the market in the downtrend ever since the start of 2020, people need to learn how to trade cryptocurrencies during that period. One most effective way to do so is short selling. Many people, due to lack of general information and only a few brokers offering it, do not know what short selling is.
Short selling (or going short) is a way to profit from a cryptocurrency which is falling in price. It is a complex process of borrowing, selling, and rebuying at a lower price and returning the “debt”, therefor making a profit. Simply put, it is betting on a Cryptocurrency going down. As previously stated, only a handful of exchanges and trading platforms offer short selling as an option.
When going short on a trade, everything is reversed. The lower the cryptocurrency goes, the higher the profits are. If the price goes higher, it may put you in the negative or trigger a stop loss.
Short selling is a perfect way to profit from the falling markets, as it allows you to catch the main bearish trend. Trading with the trend is considered the only consistent way of making a profit when trading any asset class.
We’ve all seen the crypto craze of the mid-late 2020, where the prices of all the cryptocurrencies rose exponentially, and Bitcoin even reached $20,000. This was a good example of a bullish trend. Profiting in a bullish trend is easy, because most of the assets just rise in price. However, optimizing the trades in order to profit in the best way possible is hard.
Going long is a process reverse to short selling. It involves using your funds to bet on cryptocurrencies going up. There is a small difference between buying and going long, which is:
· Buying a cryptocurrency gives you control of that cryptocurrency;
· Going long on a cryptocurrency means you are only betting on it going up, without actually possessing it.
In both cases, the result is the same in terms of profits, and these terms are often used interchangeably. However, going long (though it sounds inferior) has its advantages. Trading platforms that offer going long instead of classic buying are offering margin trading. This way, a trader can utilize it to leverage their position and trade with up to 100x of his capital (PrimeXBT offers up to a 100x leverage).
When going long on a trade, we want the price to go up. The higher the cryptocurrency price goes, the higher our profits are. If the price goes down, it will create losses for us, or even trigger a stop loss.
Going long is a great way to leverage your positions and ensure maximum profits when it comes to market uptrends.
Both going long and going short have its uses in different market conditions. One does not beat the other in performance, nor are they in a competition against each other. When used accordingly, and preferably with leverage, they are a great way of making amazing profits in a short, medium and long time horizon.
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