How can one hedge bitcoin exchange risk?
Anthony Rather than selling your bitcoins in bitcoin exchange
, you decide to hedge against them. You open a CFD trade to short bitcoin. Once any negative price movement is over, you could close your direct hedge, and the profit to the CFD trade would offset the loss to your cryptocurrency holding.
How to hedge bitcoin risk
As cryptocurrencies continue to gain attention, traders have begun finding ways of protecting their bitcoin holdings from risk. Find out how to hedge bitcoin risk – including three cryptocurrency hedging strategies.
How to hedge bitcoin
Hedging bitcoin, or any cryptocurrency, involves strategically opening trades so that a gain or loss in one position is offset by changes to the value of the other position.
Generally speaking, if you’re concerned about the risk to your position, it is probably safer to reduce your position size or close your position completely. However, hedging is seen as a useful strategy for traders who want to maintain their original bitcoin holding but create a neutral exposure. There are a variety of ways to achieve a cryptocurrency hedge, but three popular methods are: