Comparing Go Long and Shorting: Why Shorting Lacks Long-Term Investment Value

From a theoretical perspective, there is a significant risk-reward difference between shorting and going long. The maximum profit from shorting is only 1 times the investment, but the potential loss can be unlimited; in contrast, the maximum loss from going long is limited to the total principal, while the potential profit can be unlimited. This asymmetry puts shorting at a disadvantage in long-term investments.

Although there are opinions that, considering the situation where many projects in the cryptocurrency market have team sell-offs, shorting may not be as unfavorable as it seems on the surface. However, from personal experience, I still tend to avoid frequent shorting (except for hedging). There are deeper reasons behind this decision:

Continuously shorting can easily lead to negative emotions towards the industry, with an excessive focus on the darker sides of the market. This mentality may cause investors to lose confidence in the industry, and it could even trigger risky behaviors, such as attempting to short Bitcoin, which often results in serious consequences. It is worth noting that, from a macro perspective, the persistent inflation of fiat currency and the long-term upward trend of Bitcoin are undeniable facts.

Taking the collapse of a well-known cryptocurrency project as an example, although the shorting positions made considerable profits from this event, such situations are not universal. The project experienced an increase of over 400 times from its low to high, during which many shorters suffered heavy losses. Therefore, one should not focus solely on individual success stories while ignoring the overall risks.

Individuals have previously engaged in shorting the project's stablecoin, which is considered a relatively safe strategy, as stablecoins should theoretically not deviate significantly from their target price. However, such opportunities are quite rare and may only occur once every few years.

In addition, there are occasionally certain assets in the market that experience dozens or even hundreds of times increases in a short period of time. In this case, even with the most conservative margin strategy, shorting participants may face the risk of total loss.

In summary, for most investors, it is not advisable to use shorting as a regular strategy (except for hedging). In certain situations, forgoing some potential gains may be a wiser choice. Especially during periods of overall market downturn, choosing to wait and see may be more prudent than actively seeking shorting opportunities.