What is Flipping?
Flipping is an investment strategy in which people buy an asset (typically a house, car, or cryptocurrency) with the intention of selling it after a short period. The goal is to sell the item at a higher price and thus make a profit. In the crypto world, this phenomenon is often referred to as “Bitcoin flipping”, even though it already works for all cryptocurrencies.
Although this strategy was created long before cryptocurrencies, its use is common when trading in them. The main reason is the high volatility and low cost of buying and selling cryptocurrencies.
In practice, we see cryptocurrency purchases and resales in just a few hours, when the price rises. This strategy is also often used with ICOs, where people buy a cryptocurrency before it goes public, only to sell it immediately after the launch.
However, flipping carries risk. There is no guarantee that the cryptocurrency price will move in the direction we wish. At the same time, with some cryptocurrencies there may be situations where the price is overvalued, precisely because of people buying it with the intention of making a quick profit.
Be careful here – it is important not to confuse the term ‘flipping’ with the term ‘flippening’, which is a theoretical scenario where the Ethereum price overtakes the Bitcoin market cap.
Sources: coinmarketcap.com, www.bitdegree.org