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 -2.967 0.10 457,418,800 3,977,090,540 26/3/2021
OKEx (Futures) BTC-USD-210326 -3.184 0.10 898,457,100 3,115,690,685 26/3/2021
CME Bitcoin Futures BTCF1 0.000 0.00 0 2,145,706,950 29/1/2021
OKEx (Futures) BTC-USDT-210326 -2.863 0.10 46,046,900 1,688,518,169 26/3/2021
OKEx (Futures) BTC-USD-210625 -5.244 0.11 265,938,300 1,263,208,393 25/6/2021
Binance (Futures) BTCUSD_210326 -2.885 0.10 381,295,400 1,114,674,185 26/3/2021
OKEx (Futures) BTC-USD-210129 -0.287 0.14 102,614,600 787,788,982 29/1/2021
OKEx (Futures) BTC-USDT-210625 -4.697 0.14 16,960,100 745,103,446 25/6/2021
OKEx (Futures) BTC-USD-210205 -0.698 0.15 16,715,100 726,580,830 5/2/2021
CME Bitcoin Futures BTCG1 0.000 0.00 0 633,945,800 26/2/2021
OKEx (Futures) BTC-USDT-210129 -0.085 0.10 7,824,000 557,069,947 29/1/2021
OKEx (Futures) BTC-USDT-210205 -0.653 0.14 5,413,100 523,180,362 5/2/2021
Huobi Futures BTC_NQ -5.230 0.12 151,811,000 331,440,645 25/6/2021
Huobi Futures BTC_CW -0.264 0.11 32,149,700 299,003,493 29/1/2021
CME Bitcoin Futures BTCH1 0.000 0.00 0 298,535,900 26/3/2021
Huobi Futures BTC_NW -0.648 0.17 17,113,400 285,548,094 5/2/2021
Binance (Futures) BTCUSD_210625 -5.549 0.10 101,705,700 278,947,767 25/6/2021
Huobi Futures BTC_NW -0.214 0.12 32,628,700 238,974,588 29/1/2021
Huobi Futures BTC_NQ -2.499 0.10 101,925,700 184,451,223 26/3/2021
BitMEX XBTH21 -2.196 0.19 195,991,425 144,467,713 26/3/2021
Deribit BTC-26MAR21 -2.619 0.18 227,805,010 143,208,068 26/3/2021
FTX (Derivatives) BTC-0326 -2.323 0.11 126,837,112 82,262,850 26/3/2021
Binance (Futures) BTCUSD_PERP -0.099 0.11 1,635,700 62,305,943 25/12/2100
FTX (Derivatives) BTC-0625 -4.705 0.12 58,349,897 45,793,414 25/6/2021
Deribit BTC-25JUN21 -5.276 0.12 138,474,580 43,833,948 25/6/2021
Kraken (Futures) FI_XBTUSD_210326 -0.010 0.16 0 27,940,799 26/3/2021
Deribit BTC-24SEP21 -8.104 0.17 87,152,350 17,643,861 24/9/2021
FTX (Derivatives) BTC-1231 -9.380 0.23 7,766,169 5,682,539 31/12/2021
FTX (Derivatives) BTC-0924 -7.024 0.16 4,877,431 3,966,617 24/9/2021
CME Bitcoin Futures BTCZ1 0.000 0.00 0 174,000 31/12/2021
KuCoin Futures XBTMH21 -3.388 0.16 22,106 132,313 25/3/2021

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
ZBG Futures BTC_ZUSD 0.018 0.11 0.00000 1,985,285,521 3,458,613
CoinTiger (Futures) BTCUSDT -0.077 0.10 0.01000 879,304,082 1,498,279,779
Binance (Futures) BTCUSDT -0.074 0.10 0.01000 877,421,937 15,054,641,187
Bybit BTCUSD -0.034 0.10 0.01000 761,106,321 6,071,897,551
FTX (Derivatives) BTC-PERP -0.107 0.10 0.01200 563,792,873 2,646,119,914
BitMEX XBTUSD -0.013 0.10 -0.00840 546,278,694 4,231,481,953
BTSE (Futures) BTCPFC -0.230 0.11 0.00000 424,124,152 344,179,003
Bitfinex (Futures) TBTCF0:USTF0 0.175 0.12 0.00000 413,715,764 72,274,942
Deribit BTC-PERPETUAL -0.009 0.10 -0.00204 382,313,460 1,935,507,548
Binance (Futures) BTCUSD_PERP -0.084 0.10 0.01000 381,093,800 4,791,273,116
Bitfinex (Futures) BTCF0:USTF0 -0.071 0.10 0.00000 374,005,080 59,407,688
Huobi Futures BTC-USD -0.071 0.10 0.01000 344,323,600 5,066,700,623
OKEx (Futures) BTC-USD-SWAP -0.089 0.10 -0.00135 241,528,300 1,556,576,400
ZBG Futures BTC_USDT -0.355 0.10 0.04232 238,192,359 2,821,421
BitZ (Futures) BTC_USDT -0.040 0.15 0.00000 222,372,189 3,787,367,915
MXC (Futures) BTC_USDT -0.171 0.10 0.03350 174,158,865 79,170,731
Bybit BTCUSDT -0.017 0.10 0.01000 151,668,575 1,060,018,481
BitZ (Futures) 101 0.023 0.12 0.00000 147,712,494 2,328,854,320
BTCMEX BTCUSD -0.032 0.00 0.01000 134,349,216 1,655,331,620
BaseFEX BTCUSDT 0.124 0.13 0.01000 114,246,002 109,024,679
Prime XBT BTC/USD 0.000 0.13 0.00000 98,004,585 2,201,891,561
Phemex (Futures) BTCUSD -0.023 0.10 0.01000 94,617,670 936,710,063
Kraken (Futures) PI_XBTUSD -0.063 0.15 0.00107 91,262,424 570,860,619
Hopex BTCUSDT 0.037 0.00 0.00000 78,748,284 2,907,801,188
Bitget Futures CMT_BTCUSDT 0.061 0.10 0.01000 68,367,205 3,459,710,198
KuCoin Futures XBTUSDTM -0.040 0.12 0.01000 67,444,839 453,232,682
MyCoinStory BTCUSDT -0.323 0.14 0.01000 52,251,083 104,087,706
C-Trade BTCUSD -0.272 0.10 0.01000 41,609,628 24,152,310
Bitforex (Futures) SWAP-USD-BTC -0.056 0.14 0.00200 38,024,588 7,364,601,576
Phemex BTCUSD -0.058 0.10 0.05913 31,597,323 341,056,663
KuCoin Futures XBTUSDM -0.048 0.16 0.01000 24,296,245 38,496,685
Gate.io (Futures) BTC_USD -0.173 0.00 0.01000 21,520,134 30,993,041
Gate.io (Futures) BTC_USDT -0.124 0.00 0.01000 19,393,889 240,995,557
CoinFLEX (Futures) BTC-USD-SWAP-LIN -0.157 0.17 0.00000 19,108,897 53,404,339
BitZ (Futures) 201 -0.009 0.13 0.00000 17,312,302 268,684,298
ACDX Futures BTC-PERP -0.103 0.13 0.00000 13,852,556 75,793,337
Bit.com BTC-PERPETUAL -0.003 0.14 0.00000 11,645,280 31,766,830
BitMEX BCHUSD -0.362 0.24 0.05560 9,607,403 35,956,001
Bitget Futures BTCUSD -0.032 0.11 0.01000 7,784,230 198,835,997
AAX Futures BTCUSDTFP -1.768 0.16 0.10000 6,022,646 37,361,083
BitZ (Futures) BTC_USDT_BZ -0.029 0.19 0.00000 5,991,043 102,104,822
dYdX Perpetual PBTC-USDC -0.591 0.12 0.00000 5,537,979 2,348,252
BitZ (Futures) 1 0.055 0.11 0.00000 5,427,012 84,214,110
Kumex XBTUSDM -0.052 0.11 0.01000 4,542,007 12,254,524
BitMax (Futures) BTC-PERP 0.111 0.00 0.01111 4,334,197 6,499,379
Hopex BTCUSD 0.009 0.00 0.00000 4,286,720 12,275
BaseFEX BTCUSD 0.104 0.15 0.01000 2,606,363 25,876,681
BigONE Futures BTCUSD -0.119 0.14 0.01340 2,578,961 148,800,259
AAX Futures BTCUSDFP -1.615 0.17 -0.03809 2,557,144 21,996,290
BitZ (Futures) BTC_USD -0.094 0.18 0.00000 2,303,593 41,276,367
Kumex XBTUSDTM 0.058 0.11 0.01000 1,999,642 1,926
Binance (Futures) BTCBUSD 0.078 0.14 0.01000 1,922,380 44,365,675
Kraken (Futures) PI_BCHUSD 0.363 0.20 0.09312 1,614,505 4,143,893
Bithumb (Futures) BTC-PERP -0.099 0.13 0.04236 1,300,023 7,381,074
DueDEX BTCUSD -0.011 0.00 0.01000 1,075,586 43,874,777
BigONE Futures BTCUSDT -0.096 0.15 0.07977 709,829 662,319,665
DueDEX BTCUSDT -0.079 0.00 0.01000 610,710 97,097,518
Huobi Futures BTC-USDT -0.045 0.10 0.01000 194,173 7,976,944,795
Bitflyer (Futures) FX_BTC_JPY 0.000 0.12 0.00000 0 4,299,633,345
Biki (Futures) 28 -0.020 0.13 0.00997 0 4,057,314,709
OKEx (Futures) BTC-USDT-SWAP 0.025 0.10 0.04912 0 2,142,122,912
GMO Japan (Futures) BTC_JPY 0.000 0.14 0.00000 0 1,278,578,974
Bitget Futures CMT_BTCSUSDT 0.085 0.11 -0.02000 0 844,920,678
HBTC (Futures) BTC-PERP-BUSDT -0.026 0.10 0.00738 0 702,294,001
HBTC (Futures) BTC-PERP-REV -0.041 0.10 -0.00823 0 670,135,622
Biki (Futures) 11 -0.022 0.10 0.00993 0 460,193,559
Biki (Futures) 1 -0.133 0.10 0.03511 0 423,467,950
BitZ (Futures) BTC_DKKT -0.071 0.20 0.00000 0 285,216,931
BitZ (Futures) 301 0.042 0.12 0.00000 0 186,963,949
Stormgain Futures BTC-PERPUSDT 0.000 0.16 0.00400 0 132,549,304
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
Biki (Futures) 16 0.027 0.11 -0.03174 0 43,147,817
Bibox (Futures) 4BTC_USDT 0.000 0.10 0.00000 0 37,287,618
HBTC (Futures) BTC-SWAP-USDT -0.050 0.14 0.00576 0 34,335,614
HBTC (Futures) BTC-SWAP 0.014 0.17 -0.00735 0 33,357,897
Biki (Futures) 25 -0.023 0.12 0.00998 0 15,249,112
Delta Exchange BTCUSDT -0.069 0.10 0.01000 0 13,525,534
Delta Exchange BTCUSD 0.028 0.10 0.01000 0 12,618,525
BHEX (Futures) BTC-SWAP 0.010 0.11 0.00070 0 12,176,232
ZBG Futures BTC_USD-R -0.503 0.11 0.05151 0 11,907,841
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
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
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 -0.029 0.12 -0.01000 0 55,905
Binance JEX (Futures) BTCUSDT 1.385 1.08 0.01000 0 408
Liquid Perpetuals P-BTCUSD -0.749 0.75 0.01200 0 166
Liquid Perpetuals P-BTCJPY -5.265 1.49 0.25500 0 38
Biki (Futures) 2 -0.138 0.13 0.04109 0 2
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) BBCXF21 -1.650 1.25 198 19,932 29/1/2021
BTSE (Futures) BBCXH21 -0.843 1.24 691 18,988 26/3/2021

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 -0.007 0.12 0.00000 180,766 2,748
Bitfinex (Futures) TBTCDOMF0:USTF0 0.060 0.17 -0.11774 163,844 109,181
BTSE (Futures) BDIPFC 0.142 0.85 0.00000 7,095 66,145

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.