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
Huobi Futures BTC_CQ -3.969 0.01 768,949,700 2,690,211,762 25/6/2021
OKEx (Futures) BTC-USD-210625 -3.805 0.01 1,061,677,400 1,588,777,655 25/6/2021
Binance (Futures) BTCUSD_210625 -4.550 0.01 712,223,100 1,443,911,981 25/6/2021
OKEx (Futures) BTC-USDT-210625 -4.455 0.01 35,468,900 866,829,644 25/6/2021
Huobi Futures BTC_NQ -6.703 0.01 464,264,000 698,046,109 25/6/2021
OKEx (Futures) BTC-USDT-210924 -9.076 0.01 7,974,900 681,430,163 24/9/2021
OKEx (Futures) BTC-USD-210423 -0.084 0.02 94,513,300 626,484,875 23/4/2021
OKEx (Futures) BTC-USDT-210423 -0.202 0.01 5,322,000 565,493,597 23/4/2021
OKEx (Futures) BTC-USD-210924 -8.818 0.01 315,495,800 420,085,823 24/9/2021
OKEx (Futures) BTC-USD-210430 -0.519 0.04 75,809,100 404,648,202 30/4/2021
Binance (Futures) BTCUSD_210924 -8.958 0.01 156,030,300 321,159,779 24/9/2021
Huobi Futures BTC_NQ -8.934 0.01 245,807,800 312,597,839 24/9/2021
OKEx (Futures) BTC-USDT-210430 -0.563 0.02 5,451,900 294,772,177 30/4/2021
Huobi Futures BTC_CW -0.161 0.01 86,844,800 225,449,913 23/4/2021
FTX (Derivatives) BTC-0625 -4.626 0.03 264,976,664 212,076,184 25/6/2021
Huobi Futures BTC_NW -0.462 0.04 63,200,800 137,882,799 30/4/2021
Huobi Futures BTC_NW -0.998 0.01 100,881,700 137,048,654 23/4/2021
Deribit BTC-25JUN21 -4.327 0.06 400,443,220 95,658,713 25/6/2021
Binance (Futures) BTCUSD_PERP -0.099 0.11 1,635,700 62,305,943 25/12/2100
FTX (Derivatives) BTC-1231 -15.643 0.10 161,328,893 48,308,834 31/12/2021
FTX (Derivatives) BTC-0924 -10.231 0.02 77,755,430 44,197,349 24/9/2021
Deribit BTC-23APR21 -0.278 0.04 0 43,771,638 23/4/2021
Deribit BTC-30APR21 -0.600 0.01 81,780,100 31,442,848 30/4/2021
Deribit BTC-24SEP21 -9.270 0.06 240,778,430 22,751,630 24/9/2021
Deribit BTC-31DEC21 -13.890 0.09 167,103,280 22,353,047 31/12/2021
Deribit BTC-28MAY21 -2.828 0.02 18,048,540 11,495,512 28/5/2021
Deribit BTC-25MAR22 -17.024 0.56 1,491,550 1,982,571 25/3/2022
CME Bitcoin Futures BTCZ1 0.000 0.00 0 1,785,000 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
Bybit BTCUSD 0.007 0.01 0.02440 2,545,458,851 6,207,691,332
ZBG Futures BTC_ZUSD 0.018 0.11 0.00000 1,985,285,521 3,458,613
FTX (Derivatives) BTC-PERP -0.003 0.01 0.08640 1,828,527,607 3,173,193,637
Binance (Futures) BTCUSDT -0.019 0.01 0.01000 1,515,648,941 15,855,358,820
Binance (Futures) BTCUSD_PERP -0.002 0.01 0.01000 1,078,335,000 6,515,507,252
BitMEX XBTUSD 0.035 0.01 0.01000 877,437,182 2,924,566,958
Deribit BTC-PERPETUAL -0.017 0.01 0.00074 766,559,410 1,002,224,925
BTSE (Futures) BTCPFC -0.085 0.20 0.00000 763,939,604 267,753,433
Bitfinex (Futures) BTCF0:USTF0 -0.100 0.02 0.00000 683,298,190 73,413,995
Huobi Futures BTC-USD 0.008 0.01 0.01000 630,892,300 2,911,701,729
Bybit BTCUSDT 0.051 0.01 0.01000 453,039,827 996,822,586
OKEx (Futures) BTC-USD-SWAP -0.014 0.01 -0.05009 451,863,200 1,229,886,039
MXC (Futures) BTC_USDT -0.016 0.01 0.01380 428,902,391 134,836,824
Bitfinex (Futures) TBTCF0:USTF0 0.175 0.12 0.00000 413,715,764 72,274,942
Bitforex (Futures) SWAP-USD-BTC 0.013 0.01 -0.05100 279,324,329 5,948,812,875
BTCMEX BTCUSD -0.048 0.00 0.04990 239,877,938 2,861,347,502
BitZ (Futures) BTC_USDT 0.004 0.04 0.00000 239,204,770 2,468,504,542
BitZ (Futures) BTC_USDT_BZ 0.008 0.02 0.00000 237,773,631 2,455,460,454
Phemex (Futures) BTCUSD 0.023 0.01 0.00523 222,176,397 962,367,024
Hopex BTCUSDT 0.001 0.00 0.00000 194,913,844 3,458,324,768
Kraken (Futures) PI_XBTUSD 0.011 0.04 -0.00029 169,195,116 437,343,343
ZBG Futures BTC_USDT 0.020 0.07 0.01000 162,051,896 1,905,735
BitZ (Futures) 101 0.023 0.12 0.00000 147,712,494 2,328,854,320
Prime XBT BTC/USD 0.000 0.02 0.00000 143,243,760 1,012,590,947
KuCoin Futures XBTUSDTM -0.003 0.02 0.01000 135,332,083 209,999,657
KuCoin Futures XBTUSDM 0.009 0.04 0.01000 98,165,912 42,733,306
Bitget Futures CMT_BTCUSDT 0.014 0.01 0.03075 80,353,595 4,696,523,627
MyCoinStory BTCUSDT -0.081 0.02 0.06075 51,607,462 619,759,039
BaseFEX BTCUSDT -0.012 0.04 0.02625 50,220,676 52,704,466
Phemex BTCUSD -0.058 0.10 0.05913 31,597,323 341,056,663
CoinFLEX (Futures) BTC-USD-SWAP-LIN 0.016 0.03 0.00000 26,640,521 67,458,527
Gate.io (Futures) BTC_USD -0.073 0.00 0.02820 22,454,112 23,848,206
C-Trade BTCUSD 0.118 0.01 0.08431 18,411,647 43,711,560
Gate.io (Futures) BTC_USDT -0.062 0.00 0.03550 18,219,052 269,281,529
BitZ (Futures) 201 -0.009 0.13 0.00000 17,312,302 268,684,298
BitMEX BCHUSD -0.536 0.32 0.04850 15,812,974 46,055,032
Bitget Futures BTCUSD 0.022 0.01 0.05590 13,082,068 137,770,596
Perpetual protocol BTC_USDC 0.000 0.00 -0.03058 11,637,225 14,394,170
Bit.com BTC-PERPETUAL -0.071 0.03 0.01218 10,662,440 40,296,870
Binance (Futures) BTCBUSD -0.100 0.04 0.01000 8,876,270 60,703,371
dYdX Perpetual PBTC-USDC 0.090 0.05 0.00001 7,554,375 1,121,936
BitZ (Futures) 1 0.055 0.11 0.00000 5,427,012 84,214,110
ACDX Futures BTC-PERP -0.368 0.07 0.00000 4,613,632 33,312,857
Kumex XBTUSDM -0.052 0.11 0.01000 4,542,007 12,254,524
dYdX Perpetual BTC-USD -0.051 0.02 0.01194 3,649,138 4,965,579
Hopex BTCUSD -0.001 0.00 0.00000 3,279,170 3,757
BitZ (Futures) BTC_USD 0.009 0.08 0.00000 3,185,448 33,060,739
DueDEX BTCUSD -0.040 0.00 0.30530 2,709,889 10,920,330
Kraken (Futures) PI_BCHUSD 0.381 0.25 -0.02412 2,595,319 4,788,455
AscendEX (BitMax) (Futures) BTC-PERP -0.105 0.00 0.04963 2,439,673 12,440,163
BitMax (Futures) BTC-PERP -0.105 0.00 0.04963 2,439,673 7,922,145
DueDEX BTCUSDT -0.048 0.00 0.11470 2,120,879 6,267,078
Kumex XBTUSDTM 0.058 0.11 0.01000 1,999,642 1,926
BigONE Futures BTCUSD -0.099 0.02 0.06995 1,967,213 58,937,840
BigONE Futures BTCUSDT -0.048 0.02 0.09447 1,859,784 549,084,806
dYdX Perpetual (L1) PBTC-USDC 1.060 0.28 0.00000 1,310,858 175,797
Bithumb (Futures) BTC-PERP -0.099 0.13 0.04236 1,300,023 7,381,074
AAX Futures BTCUSDTFP -0.025 0.02 0.00031 1,298,092 7,063,959
BaseFEX BTCUSD -0.074 0.04 0.01000 1,083,265 6,342,726
AAX Futures BTCUSDFP -0.005 0.02 -0.00430 1,071,131 5,588,060
Huobi Futures BTC-USDT 0.030 0.01 0.01000 265,084 5,576,841,597
Alpha5 XBTUSD 0.006 0.05 0.00112 151,518 243,382
Biki (Futures) 28 -0.020 0.13 0.00997 0 4,057,314,709
HBTC (Futures) BTC-PERP-REV 0.054 0.01 -0.07147 0 2,044,028,855
CoinTiger (Futures) BTCUSDT -0.019 0.01 0.01000 0 1,579,955,637
OKEx (Futures) BTC-USDT-SWAP -0.018 0.01 0.06678 0 1,450,748,723
Bitget Futures CMT_BTCSUSDT 0.005 0.01 -0.01214 0 1,083,481,877
GMO Japan (Futures) BTC_JPY 0.000 0.02 0.00000 0 551,603,318
Biki (Futures) 11 -0.022 0.10 0.00993 0 460,193,559
HBTC (Futures) BTC-PERP-BUSDT 0.086 0.01 -0.04408 0 425,204,805
Stormgain Futures BTC-PERPUSDT 0.000 0.02 0.00400 0 363,733,554
Bitflyer (Futures) FX_BTC_JPY 0.000 0.06 0.00000 0 226,288,320
BitZ (Futures) BTC_DKKT 0.013 0.03 0.00000 0 223,798,298
BitZ (Futures) 301 0.042 0.12 0.00000 0 186,963,949
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 0.040 0.21 0.01000 0 81,040,734
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
Delta Exchange BTCUSDT -0.176 0.01 0.05600 0 23,882,819
HBTC (Futures) BTC-SWAP-USDT 0.022 0.01 -0.01356 0 22,291,005
HBTC (Futures) BTC-SWAP 0.001 0.02 -0.04575 0 20,703,293
Biki (Futures) 25 -0.023 0.12 0.00998 0 15,249,112
BHEX (Futures) BTC-SWAP 0.010 0.11 0.00070 0 12,176,232
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
Biki (Futures) 18 0.063 0.12 0.01940 0 6,486,261
Bibox (Futures) 4BTC_USDT 0.000 2.67 0.00000 0 727,310
ZBG Futures BTC_USD-R20190628 0.000 0.11 0.00000 0 311,190
Biki (Futures) 14 -0.021 0.14 0.00998 0 280,646
MXC (Futures) BTC_USD 0.019 0.01 0.02640 0 6,718
Liquid Perpetuals P-BTCUSD -1.188 1.19 0.00500 0 1,212
Binance JEX (Futures) BTCUSDT 0.386 0.82 0.01000 0 586
Biki (Futures) 2 -0.170 0.11 -0.13722 0 406
Liquid Perpetuals P-BTCJPY -2.114 1.00 0.04700 0 105
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.

Exchange Symbol Premium (-)
Discount (+)
Spread Open Intrest 24h Volume Expiry Date
BTSE (Futures) BBCXJ21 -1.081 0.28 191 35,723 30/4/2021
BTSE (Futures) BBCXM21 0.404 0.38 200 25,544 25/6/2021

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.

But at the moment, there is not any perpetual swap on index with BTC embeded.

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 0.283 3.34 0.00000 364,040 55,813
Bitfinex (Futures) TBTCDOMF0:USTF0 0.060 0.17 -0.11774 163,844 109,181
BTSE (Futures) BDIPFC 0.053 0.18 0.00000 5,698 63,007

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.