Can crypto go negative?

No, a cryptocurrency's price cannot go negative. A coin or token is something you hold, not something you are obliged to deliver or pay for, so the worst it can be worth is nothing. What can go negative is a trading account that uses borrowed money. Our guides on what happens if crypto goes to zero and whether you can lose more than you invest cover the zero case and the basics of leverage.

Can a coin price go below zero?

A negative price means a seller pays the buyer to take something away. That only happens when holding the asset costs money.

The best-known example is oil. On April 20, 2020, the front-month WTI crude oil futures contract on NYMEX traded as low as minus $40.32 a barrel, according to the US Energy Information Administration. Anyone still holding the contract at expiry had to take physical delivery of oil in Cushing, Oklahoma, where storage was about 76% full and spare space was scarce and costly. Traders without storage paid others to take the contracts.

A crypto token has no delivery date and no storage bill. If nobody wants it, a holder can simply leave it in a wallet.

Can bitcoin go negative?

Not its price, for the same reason. Owning bitcoin outright never creates a bill for storage or delivery, so the zero floor applies to it as much as to any small token.

Some numbers around crypto can turn negative. A perpetual futures funding rate is negative when short traders pay long traders, and profit and loss on a position can be negative. Neither is the price of the coin.

Can you owe money on crypto?

Yes, if you trade on margin. Kraken's page on US margin trading says a margin call comes when the margin level falls to 80%, with automatic liquidation at 40%. It warns that liquidation and conversion charges may leave a deficiency, and that the customer may remain responsible for it after collateral is applied.

Kraken's derivatives platform outside the US takes another approach. Its Equity Protection Process is designed so the balance "can never go below zero." Kraken notes this process does not apply to its US derivatives customers.

What is negative balance protection in crypto?

Negative balance protection caps losses at the money in the account. In the European Union, the markets regulator ESMA brought in rules for retail contracts for difference (CFDs) in 2018. They limited leverage on crypto CFDs to 2 to 1 and capped a retail client's total losses at the funds in the account.

Protection differs by platform and country, so the account terms decide whether a negative balance can happen. The mechanics of forced closing are covered in what happens if you get liquidated in crypto.

Crypto prices are volatile, and leveraged trading can lose money faster than buying outright.