How to hedge Bitcoin

BTC is Bitcoin token.

As BTC is a volatile asset, in certain instances it will require hedging.

The best method of hedging BTC is to use crypto derivatives.
There are multiple of the exchanges serving futures and perpetual swaps.

Choose from the list of hedging options

Bitcoin Futures

When required to hedge the position for the mid-term period (weeks to months) you can use futures.

Exchange Symbol Premium (-)
Discount (+)
Spread Open Intrest 24h Volume Expiry Date
Binance (Futures) BTCUSD_211231 -2.845 0.01 658,412,900 790,184,095 31/12/2021
OKEx (Futures) BTC-USD-211231 -2.630 0.01 715,553,400 766,105,227 31/12/2021
OKEx (Futures) BTC-USDT-211231 -2.630 0.01 17,881,600 648,156,155 31/12/2021
Huobi Futures BTC_CQ -0.704 0.01 357,585,100 402,202,693 31/12/2021
OKEx (Futures) BTC-USD-220325 -5.887 0.02 205,852,800 354,601,359 25/3/2022
OKEx (Futures) BTC-USD-211022 -0.244 0.01 78,971,100 323,756,611 22/10/2021
OKEx (Futures) BTC-USDT-220325 -6.137 0.02 8,768,100 315,230,239 25/3/2022
OKEx (Futures) BTC-USDT-211022 -0.141 0.02 2,571,600 266,480,221 22/10/2021
OKEx (Futures) BTC-USD-211029 -0.557 0.03 18,506,500 176,344,342 29/10/2021
OKEx (Futures) BTC-USDT-211029 -0.606 0.04 2,746,000 156,506,181 29/10/2021
Binance (Futures) BTCUSD_220325 -6.062 0.01 104,954,300 99,470,192 25/3/2022
FTX (Derivatives) BTC-1231 -2.796 0.02 490,115,443 65,625,043 31/12/2021
Binance (Futures) BTCUSD_PERP -0.099 0.11 1,635,700 62,305,943 25/12/2100
Bybit BTCUSDZ21 -3.000 0.01 119,983,688 50,618,677 31/12/2021
FTX (Derivatives) BTC-0325 -6.902 0.02 542,639,903 35,418,093 25/3/2022
Deribit BTC-31DEC21 -2.579 0.04 360,940,380 33,984,393 31/12/2021
Deribit BTC-22OCT21 -0.249 0.04 0 13,517,771 22/10/2021
Deribit BTC-29OCT21 -0.478 0.01 54,463,860 9,971,958 29/10/2021
Deribit BTC-25MAR22 -5.545 0.07 211,512,010 8,834,653 25/3/2022
Deribit BTC-30SEP22 -9.926 0.05 19,691,810 4,189,325 30/9/2022
Deribit BTC-24JUN22 -7.736 0.10 68,062,610 3,992,083 24/6/2022
Deribit BTC-26NOV21 -1.554 0.06 23,511,370 1,114,859 26/11/2021
Huobi Futures BTC_NQ -0.819 0.08 14,442,000 728,401 25/3/2022
CME Bitcoin Futures BTCZ1 0.000 0.00 0 250,000 31/12/2021

Bitcoin Perpetual Swaps

Short position for indefinite time is also possible by using perpetual.
Moreover you can earn swaps in particular cases.

Exchange Symbol Premium (-)
Discount (+)
Spread Funding Rate Open Intrest 24h Volume
Binance (Futures) BTCUSDT -0.082 0.01 0.03146 3,298,925,547 13,126,644,251
FTX (Derivatives) BTC-PERP -0.054 0.01 0.05520 2,892,331,935 3,200,547,943
ZBG Futures BTC_ZUSD 0.018 0.11 0.00000 1,985,285,521 3,458,613
Bybit BTCUSD -0.081 0.01 0.04660 1,595,402,853 2,774,065,457
Binance (Futures) BTCUSD_PERP -0.087 0.01 0.03276 1,134,309,000 6,176,947,912
BTSE (Futures) BTCPFC -0.095 0.01 0.00000 857,810,011 1,019,420,766
Bybit BTCUSDT -0.078 0.01 0.11260 833,164,846 2,028,573,030
Bitfinex (Futures) BTCF0:USTF0 -0.061 0.01 0.00000 761,853,633 74,454,679
BitMEX XBTUSD -0.079 0.01 0.01300 711,320,100 829,153,368
Deribit BTC-PERPETUAL -0.093 0.01 0.01676 634,797,010 408,053,649
KuCoin Futures XBTUSDTM -0.020 0.01 0.22470 609,710,279 615,356,528
Prime XBT BTC/USD 0.000 0.02 0.00000 522,423,022 781,595,058
dYdX Perpetual BTC-USD -0.071 0.01 0.00735 487,592,210 1,309,364,828
OKEx (Futures) BTC-USD-SWAP 0.013 0.01 0.02625 457,423,900 779,950,088
Bitfinex (Futures) TBTCF0:USTF0 0.175 0.12 0.00000 413,715,764 72,274,942
OKEx (Futures) BTC-USDT-SWAP -0.010 0.01 0.05465 400,858,605 2,283,126,315
MEXC Global (Futures) BTC_USDT -0.009 0.01 0.02140 395,754,881 151,653,821
Bitget Futures CMT_BTCUSDT 0.001 0.01 0.03990 312,311,704 3,818,424,600
Huobi Futures BTC-USDT -0.012 0.01 0.01000 310,563,363 2,086,197,954
BTCMEX BTCUSD 0.084 0.00 0.01000 289,778,991 2,143,017,004
BTCMEX BTCUSDT 0.050 0.00 0.01000 289,778,991 572,722,079
Phemex (Futures) BTCUSD -0.056 0.01 0.16938 287,904,969 1,250,632,412
Huobi Futures BTC-USD -0.030 0.01 0.01000 225,184,100 897,215,294
KuCoin Futures XBTUSDM -0.075 0.02 0.01000 160,953,811 47,240,317
BitZ (Futures) 101 0.023 0.12 0.00000 147,712,494 2,328,854,320
Kraken (Futures) PI_XBTUSD -0.014 0.05 0.00079 130,296,323 206,481,273
ZBG Futures BTC_USDT 0.007 0.01 0.01000 126,280,656 3,305,452
Bitforex (Futures) SWAP-USD-BTC -0.110 0.01 0.02900 115,551,186 802,302,577
MXC (Futures) BTC_USD 0.018 0.06 0.02000 111,583,200 1,212
Binance (Futures) BTCBUSD -0.061 0.01 0.02580 90,973,473 1,656,428,041
C-Trade BTCUSD -0.066 0.01 0.01383 76,220,410 45,697,243
MEXC Global (Futures) BTC_USD -0.135 0.03 0.02120 72,954,000 444
MXC (Futures) BTC_USDT -0.023 0.03 0.00297 63,213,940 113,293,123
C-Trade BTCUSDT -0.075 0.01 0.05000 63,035,730 23,927,673
Hopex BTCUSDT -0.001 0.00 0.00000 53,691,478 564,835,018
MyCoinStory BTCUSDT -0.016 0.02 0.01000 51,117,733 18,546,549
Gate.io (Futures) BTC_USDT -0.028 0.00 0.03760 47,931,169 653,187,717
Phemex BTCUSD -0.058 0.10 0.05913 31,597,323 341,056,663
BaseFEX BTCUSDT -0.052 0.03 0.02676 31,140,688 30,095,707
Bitget Futures BTCUSD 0.010 0.01 0.05950 18,945,726 96,755,783
BitZ (Futures) 201 -0.009 0.13 0.00000 17,312,302 268,684,298
AAX Futures BTCUSDTFP 0.125 0.04 0.05291 17,164,993 76,871,892
Perpetual protocol BTC_USDC 0.000 0.00 0.00202 13,996,653 2,683,947
AscendEX (BitMax) (Futures) BTC-PERP -0.112 0.00 0.04326 11,324,328 22,593,761
CoinFLEX (Futures) BTC-USD-SWAP-LIN -0.002 0.01 0.00210 11,039,265 170,270,889
BitMEX BCHUSD -0.143 0.02 0.10410 8,207,618 15,621,506
dYdX Perpetual PBTC-USDC 0.090 0.05 0.00001 7,554,375 1,121,936
AAX Futures BTCUSDFP 0.045 0.01 0.03680 7,520,849 35,279,320
BitZ (Futures) 1 0.055 0.11 0.00000 5,427,012 84,214,110
ACDX Futures BTC-PERP -0.018 0.05 0.00000 5,076,214 53,734,065
Gate.io (Futures) BTC_USD -0.003 0.00 0.01000 5,018,730 19,488,960
Kumex XBTUSDM -0.052 0.11 0.01000 4,542,007 12,254,524
Hopex BTCUSD -0.007 0.00 0.00000 4,327,290 5,129
Bit.com BTC-PERPETUAL -0.271 0.09 0.12902 3,888,405 6,063,870
BigONE Futures BTCUSDT -0.101 0.01 0.09682 3,423,439 243,291,615
Kraken (Futures) PI_BCHUSD -0.112 0.18 0.10075 2,757,766 1,295,996
BitMax (Futures) BTC-PERP -0.105 0.00 0.04963 2,439,673 7,922,145
BitZ (Futures) BTC_USDT -0.001 0.03 0.00000 2,082,641 11,464,759
Kumex XBTUSDTM 0.058 0.11 0.01000 1,999,642 1,926
Bithumb (Futures) BTC-PERP -0.099 0.13 0.04236 1,300,023 7,381,074
BigONE Futures BTCUSD -0.049 0.02 0.01000 1,053,537 47,001,174
dYdX Perpetual (L1) PBTC-USDC 0.128 77.50 0.00000 843,580 410,367
BaseFEX BTCUSD 0.036 0.03 0.01000 337,650 3,398,647
BitZ (Futures) BTC_USD -0.001 0.08 0.00000 50,787 296,651
Alpha5 XBTUSD 7.706 0.57 0.00003 292 11,194
Biki (Futures) 28 -0.020 0.13 0.00997 0 4,057,314,709
HBTC (Futures) BTC-PERP-REV -0.004 0.01 -0.02077 0 1,586,088,571
CoinTiger (Futures) BTCUSDT -0.081 0.01 0.03137 0 1,306,480,603
Bitget Futures CMT_BTCSUSDT 0.003 0.01 -0.02000 0 1,007,519,895
BHEX (Futures) BTC-PERP-REV -0.014 0.01 -0.01084 0 661,137,486
BHEX (Futures) BTC-PERP-BUSDT -0.014 0.01 0.00422 0 544,266,307
Bitflyer (Futures) FX_BTC_JPY 0.000 0.01 0.00000 0 478,416,990
Biki (Futures) 11 -0.022 0.10 0.00993 0 460,193,559
Stormgain Futures BTC-PERPUSDT 0.000 0.03 0.00400 0 357,723,040
Bybit BTCUSDM21 -1.335 0.01 -0.04060 0 329,470,782
BitZ (Futures) BTC_DKKT 2.155 0.07 0.00000 0 297,641,032
GMO Japan (Futures) BTC_JPY 0.000 0.02 0.00000 0 263,362,797
Bybit BTCUSDU21 -6.760 0.01 -0.04060 0 205,364,120
HBTC (Futures) BTC-PERP-BUSDT 0.051 0.01 -0.00284 0 203,428,138
BitZ (Futures) 301 0.042 0.12 0.00000 0 186,963,949
Crypto.com Exchange (Futures) BTCUSD-PERP -0.048 0.01 0.00002 0 186,084,617
Biki (Futures) 1 1.440 0.02 -0.16641 0 140,945,714
Biki (Futures) 29 -0.020 0.12 0.01544 0 107,521,811
Biki (Futures) 17 -0.019 0.11 0.01790 0 99,640,498
ZBG Futures BTC_USD-R 0.006 0.01 0.03935 0 57,099,691
Binance (Futures) BTCUSDT_210326 -4.217 0.18 0.00000 0 55,708,338
Biki (Futures) 16 0.027 0.11 -0.03174 0 43,147,817
HBTC (Futures) BTC-SWAP -0.019 0.07 -0.00668 0 39,112,668
HBTC (Futures) BTC-SWAP-USDT -0.064 0.02 0.01014 0 30,321,688
Crypto.com (Futures) BTCUSD-PERP 0.000 0.05 0.00000 0 28,463,889
Delta Exchange BTCUSDT -0.176 0.01 0.05600 0 23,882,819
Biki (Futures) 25 -0.023 0.12 0.00998 0 15,249,112
EQONEX (Perpetual) 25 -0.062 0.02 58.11063 0 12,338,364
Biki (Futures) 27 -0.020 0.12 0.00998 0 10,865,415
Biki (Futures) 26 -0.023 0.15 0.00993 0 10,138,308
Biki (Futures) 21 -0.024 0.14 0.00997 0 10,103,314
Biki (Futures) 15 -0.021 0.12 0.00997 0 9,924,614
Delta Exchange BTCUSD -0.116 0.01 0.06750 0 8,511,155
ZBG Futures BTC_USD-R20190927 0.000 0.11 0.00000 0 8,043,860
Biki (Futures) 24 -0.028 0.17 0.00166 0 6,828,717
Biki (Futures) 19 -0.121 0.11 -0.00003 0 6,584,926
Bibox (Futures) 4BTC_USDT 0.000 0.01 0.00000 0 6,507,894
Biki (Futures) 18 0.063 0.12 0.01940 0 6,486,261
Crypto.com Exchange (Futures) BTCUSD-211231 -2.585 0.06 0.00000 0 1,170,057
BHEX (Futures) BTC-SWAP 0.052 0.07 -0.01350 0 1,106,958
Crypto.com (Futures) BTCUSD-210625 0.000 0.06 0.00000 0 868,907
ZBG Futures BTC_USD-R20190628 0.000 0.11 0.00000 0 311,190
BHEX (Futures) BTC-SWAP-USDT 0.004 0.12 -0.02497 0 296,464
Biki (Futures) 14 -0.021 0.14 0.00998 0 280,646
Crypto.com Exchange (Futures) BTCUSD-220325 -5.846 0.12 0.00000 0 146,154
Crypto.com Exchange (Futures) BTCUSD-210924 0.183 0.13 0.00000 0 114,430
Crypto.com (Futures) BTCUSD-210924 0.000 0.12 0.00000 0 9,349
Crypto.com (Futures) BTCUSD-211231 0.000 0.24 0.00000 0 8,974
Crypto.com Exchange (Futures) BTCUSD-210625 0.000 0.33 0.00000 0 5,475
MCDEX 00002 0.000 0.00 0.00000 0 1,960
Liquid Perpetuals P-BTCUSD -1.188 1.19 0.00500 0 1,212
BitZ (Futures) BTC_USDT_BZ -1.676 0.04 0.00000 0 868
Biki (Futures) 2 -0.170 0.11 -0.13722 0 406
DueDEX BTCUSD 0.663 0.00 0.01000 0 134
DueDEX BTCUSDT -2.508 0.00 0.01000 0 126
Liquid Perpetuals P-BTCJPY -2.114 1.00 0.04700 0 105
Binance JEX (Futures) BTCUSDT 0.491 0.86 0.01000 0 10
Stormgain Futures BTC-PERPDAI NaN 0.04 0.00400 0 0
Stormgain Futures BTC-PERPUSDC NaN 0.11 0.00400 0 0
Stormgain Futures BTC-PERPUDAI NaN 0.11 0.00400 0 0
Prime XBT BTC/USDC 0.000 0.00 0.00000 0 0
Prime XBT BTC/USDT 0.000 0.00 0.00000 0 0
CoinFLEX (Futures) BTC-USD-SWAP-LIN_LIQ 0.000 0.00 0.00000 0 0
CoinFLEX (Futures) BTC-USD-SWAP-LIN-LIQ 0.000 0.00 0.00000 0 0

Future Contracts on Indexes with Bitcoin embeded

Another way of hedging positions for the mid-term is using future contracts on indexes with the asset price as a component of the the index.

Unfortunatelly, no future contract on index consisting of BTC exists.

Perpetual Swaps on Indexes with Bitcoin component

Sometime the best option to hedge Bitcoin is to short with perpetual contract idefinitely.
Earning swaps can be in some cases crucial for the positioning.

Exchange Symbol Premium (-)
Discount (+)
Spread Funding Rate Open Intrest 24h Volume
BTSE (Futures) BBCXPFC 0.475 0.74 0.00000 0 57,311

Other crypto related Indexes (Perpetual Swaps)

There are several specyfic cryptocurrencies market Indexes which can be considered as a hedge for the trading positions. As Bitcoin take the lion's share of the whole market capitalisation, BTC dominance is one of the most notable.
Even more than on other markets, Bitcoin volatility influences almost all the trading pairs traded with both BTC and altcoins at the same moment.

Exchange Symbol Premium (-)
Discount (+)
Spread Funding Rate Open Intrest 24h Volume
Bitfinex (Futures) BTCDOMF0:USTF0 -0.025 0.05 0.00000 960,225 83,162
Bitfinex (Futures) TBTCDOMF0:USTF0 0.060 0.17 -0.11774 163,844 109,181
Binance (Futures) BTCDOMUSDT -0.008 0.02 0.01000 4,820 9,437,558
BTSE (Futures) BDIPFC -0.095 0.28 0.00000 4,178 17,889

Negative correlation with Bitcoin

It can be an awkward exercise to find liquid, negatively correlated altcoins in the cryptocurrency market.

The strongest negatively correlated crypto tokens (returns in USD) in a long term are:

DASH
BTC -0.02

Check correlations with Bitcoin or use a custom form to check BTC changes in correlation coefficient with other token.

Stable coins or non-crypto assets can also be considered for hedging positions.