If you are planning to buy Ethereum (or already have) then it would also be useful to know how best to sell the cryptocurrency. Whilst a large number of investors choose to buy and hold Ethereum for the very long term, taking profit as the asset increases in value is a great way to reduce risk and recover an original investment. Selling Ethereum can be done at a multitude of online exchanges – some of which are listed below. The ease at which Ethereum can be sold varies (some online exchanges have a very poor user experience) and we have ranked the following with the easiest at the top.
If you are interested in “shorting Ethereum” then scroll further below to see a list of websites that make this available. You can also use the navigation menu on this page to skip ahead.
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Coinbase is recognized as one of the most popular exchanges for users to buy and sell Ethereum. The exchange is open to many countries in Europe as well as the United Kingdom and USA. Residents in Australia are able to purchase Ether at Coinbase, but another exchange must be used to sell the cryptoasset for AUD.
localethereum is an anonymous marketplace for buyers and sellers of Ether powered by smart contracts. Launched on October 20th 2017, localethereum is a new but popular place to purchase Ether from anywhere in the world.
Binance is a cryptocurrency exchange with a daily trading volume that regularly exceeds 2.5 billion US dollars with a membership in excess of 10 million users
Changelly is a rapidly growing exchange which allows users to buy dozens of cryptocurrencies using a credit/debit card or other cryptocurrencies.
To sell Ethereum at any of the above exchanges you must have Ethereum in your exchange wallet. If you have chose to store Ethereum on an exchange (we do not recommend this) then you will already have access to selling it. If you store your Ethereum in a wallet where you control your private key, then you will need to transfer your Ether to your exchange wallet in order to sell it. We provide further details on Ethereum transactions here however a quick overview can be found below.
The method for selling Ethereum varies from exchange to exchange however the general process remains the same. If you are using a platform like Coinbase (recommended for beginners), liquidity is provided by the exchange and ETH sales are done directly between the seller and the platform. If you are using an exchange marketplace like Kraken or Poloniex then the sale of ETH is done between yourself and a matched peer(s).
There are advantages to selling Ethereum directly to an exchange platform like Coinbase. Two of the key advantages are speed and simplicity; the platform will guarantee to purchase your Ethereum at a set rate. There will be a maximum amount of ETH that can be sold at any one time, however the order will be fulfilled immediately.
Adversely however, the exchange will often buy Ether at a less favorable rate, charging a small premium to cover the added risk of providing liquidity to their entire userbase. Exchanges like these will also cap the amount of Ether that can be sold in any single time period.
A marketplace simply connects willing buyers and sellers together. Buyers choose how much they are willing to pay for ETH (the “Bid” price) while sellers set a price at which they are willing to sell ETH (the “Ask” price). The Ask price is always higher than the Bid and the difference between the two is known as the “spread”. Sales on a marketplace have two key advantages over sales to an exchange platform: the price (both for buying and selling) is more favorable than the alternative, and the amount that can be sold at any one time is far greater. Marketplaces are generally a better choice for more experienced Ethereum traders, however the key factor is “liquidity”. If a marketplace has low liquidity i.e. very little volume for a certain currency pair such as ETH/USD, then the price and speed of sale can be poor.
Marketplace sales can be difficult for certain currencies where volume/liquidity is low. For example, the cryptocurrency pair ETH/GBP is poorly catered for, often requiring users to sell ETH for USD (a highly liquid with lots of buyers and sellers) and then converting the received USD to GBP at the bank following a SEPA/SWIFT withdrawal. To find the most liquid exchange for your chosen currency pair, see the Ethereum markets at CoinMarketCap.
Selling Ethereum on a marketplace is more complex than selling directly to a platform. When selling ETH the seller has two options for how they wish to sell. Either the seller creates the market (market maker) and specifies the price at which they are willing to sell, or they sell to an existing buyer who has listed a buy (Bid) price. Market makers create a “limit order” which specifies the lowest price that the seller is willing to sell Ethereum for. These markets are then matched with willing buyers. Alternatively – and more simply – a seller can sell using a “market order”, stating that they are willing to sell to the highest buyer on the market (market taker). However, with a market order there is a danger that the seller may get an unfavorable price as explained below. Sellers who act as a market maker are often rewarded with lower trading fees than market takers.
Example: the ETH/USD market has 2 buyers, one who is willing to buy 5 ETH at $790 and another who is willing to buy 10 ETH at $780. If a seller chooses to sell 8 ETH (using a market order), they will receive 5 ETH at $790 and the remaining 3 ETH at $780. If however, they choose a limit order at the same price, then they would sell 5 ETH at $790 and the remaining 3 ETH would not be sold until a willing buyer joined the market. By creating a limit order, the seller guarantees the price at which their Ether will be sold.
Placing a market order in the example above may be acceptable for many sellers. However, consider an example where the seller wished to sell 10,000 ETH. The market would be liquidated at a lower and lower price, potentially selling some ETH tokens for just a few dollars. This has been seen before – resulting in a “flash crash”. Generally speaking, a seller will be better off selling using a limit order, however the mechanics of this should be understood properly before placing a sell order. One disadvantage of a limit order is that the sale may take hours or days to be executed in full. If the price moves negatively, a limit order may need to be closed and reopened at the lower price. A market order will guarantee a fast sale on a highly liquid exchange and is often preferable for those willing to sacrifice profit in return for speed.
“Shorting the market” is the act of selling an asset today and buying it back at a later date – for a lower price (subsequently making profit). An Ethereum trader who chooses to short ETH/USD would benefit from the price of ETH/USD falling. For example, they would sell ETH/USD today for $700 and buy back later for $600. In this case, the possible upside of a short position is limited by the price of ETH/USD falling to $0. Note that the short seller does not actually own Ether, instead the cryptoasset is borrowed and thus creates a liability.
The possible downside to short selling is unlimited – the price of ETH/USD may rise indefinitely creating limitless losses. For this reason, shorting Ethereum is very high risk, and positions are typically opened and closed over the short term with stop-loss limits put in place (automatic closure of a position if losses exceed a user-specified amount).
Whilst very few people have dared to short Ethereum/Fiat currency pairs, some may choose to short ETH/BTC, expecting that the price of Bitcoin will outperform the price of Ethereum over a given period. Conversely, a trader may choose to short BTC/ETH – predicting that the opposite will occur.
Shorting a cryptocurrency can lead to losses that exceed the user’s deposit. For this reason, to short Ethereum the trader would require a margin account. A margin account ensures that there are additional funds (a buffer) in the trader’s account which will cover losses if the position moves adversely. If the margin account is not maintained (that is to say, if there is not enough of a buffer), then the position may be closed automatically by that platform. This is known as a “margin call”.
Ethereum can be shorted through 3 different avenues.
CME Group and CBOE have begun trading Bitcoin futures and allow investors to short BTC/USD and other fiat currency pairs. It is anticipated that these same futures markets will be opened up to Ethereum. At this point in time, selling or “shorting” Ethereum on these markets is not yet accessible.
There are several cryptocurrency exchanges which allow users to open margin accounts. These exchanges will allow users to sell ETH/fiat and ETH/crypto pairs as well as many other non-Ethereum pairs.
One of the easiest ways to short Ethereum today is through a CFD broker. These brokers allow users to essentially “bet” on the direction that the price of Ethereum will move. If the trader believes Ethereum will fall, then creating a “sell” order will reward the user if the price drops. An advantage to using CFDs is in the highly regulated nature of the broker (see the top Ethereum brokers above) and the simplicity of setting up an account makes this option highly appealing to new traders.