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You can just artificially limit your losses by bailing out when you lose as much as you shorted.

You run a small / theoretical risk of getting stuck in a short squeeze situation where you can't get out, but that risk varies substantially by security and there are often laws or mechanisms you can use to protect yourself.

Crypto currency is the wild west,there's no one coming to save you, exchanges and whales have access to the books on who they can squeeze.

Its how many operate.

This is my exact thought as well. The risk-reward of shorting makes the most sense when volatility is low. It is certainly the worst thing to do in an irrational bull market AKA bubble.

Maybe it's a calculated risk thinking that if you lose the bet you file for bankruptcy?