What is Longing (Long Position)?
Let's find out Longing (Long Position) meaning, definition in crypto, what is Longing (Long Position), and all other detailed facts.
Longing is a market position that investors take when they buy a cryptocurrency or any other asset for a lower price and wait until it goes up to sell it. It is considered to be a bullish market strategy adopted by professional traders who expect an asset to significantly rise in value and lead to major gains for holding onto it for an extended period.
Taking up long positions originated in the traditional markets and is practiced in the trade of stocks, securities, and other assets. However, long and short positions are important in the crypto trade, particularly given the volatility of cryptocurrencies.
Crypto traders adopt a long position if they detect that the price of the asset will be increasing. They rely on technical analysis done by market experts to confirm their predictions. Basic analysis on social media platforms within crypto communities, as well as updates on the market situation in the news, can also help predict price trends.
Some cryptocurrency holders may accidentally go into long positions as they forget that they even hold Bitcoin (BTC) or other digital assets.
Short and long positions can be exploited even without owning any cryptocurrency. Such an option is possible on derivative platforms by making use of options and futures. As the crypto markets matured these contract options started gaining popularity.
Traders use KYC-abiding crypto exchange platforms to place long or short positions on cryptocurrencies. They are able to hold their positions on spot or futures markets. Binance and Coinbase are among the most popular crypto exchanges with millions of users participating in the trades daily.
Long vs. Short Position in Crypto
Longing and shorting are terms used to describe two opposing market positions. Whether a trader is longing or shorting their crypto asset depends on whether they expect its value to rise or fall in the future. In essence, longing and shorting describes the fundamentals of trading.
Cryptocurrency trading has borrowed some terminology from traditional markets. Traders that take up a short position expect the value of the asset to decrease from a certain time point and sell it for a lower price. If a trader expects the value of the asset to go up, the position of waiting to sell it is known as longing or going long.
Cryptocurrency traders and investors prefer long over short positions. It’s mainly because they’re afraid to miss out on exploiting the rising crypto prices.
Additionally, cryptocurrency traders often take a long position because of major developments in blockchain technology and virtual currencies. For instance, Bitcoin overtook its previous all-time high in November 2020.
During this time, PayPal started providing a new crypto-specific service. It allowed traders to buy and sell various cryptocurrencies such as Bitcoin, Ethereum (ETH), Litecoin (LTC), and Bitcoin Cash (BCH), to name a few.
Furthermore, there was a rise in investing in cryptocurrencies which was mainly influenced by sudden institutional interest. Some investors used their digital assets to hedge against stock market volatility.
Traders are able to take up long or short positions on cryptocurrency by using derivatives exchanges. In this case, traders do not have to buy or sell the assets on spot markets.
If the market is following a bullish trend, the traders will take on more long positions than short ones as they aim to make a profit from the price increase. Bearish market trends point towards an increase in short positions.
Professional traders often buy the dip and wait for the prices to go back up to sell it again. However, taking such positions can pose the risk of liquidation, particularly for traders involved in the futures market. It is highly recommended for traders to do diligent research before taking up risky market positions.