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 -1.969 0.10 308,164,500 893,785,977 25/12/2020
OKEx (Futures) BTC-USD-201225 -2.332 0.10 401,533,900 462,832,022 25/12/2020
CME Bitcoin Futures BTCV0 0.000 0.00 0 246,545,000 30/10/2020
OKEx (Futures) BTC-USDT-210326 -2.912 0.12 25,848,800 175,897,134 26/3/2021
OKEx (Futures) BTC-USDT-201225 -2.088 0.10 96,719,700 174,017,937 25/12/2020
OKEx (Futures) BTC-USDT-201030 -0.388 0.11 13,121,200 159,975,452 30/10/2020
OKEx (Futures) BTC-USD-201030 -0.261 0.10 60,919,900 126,787,989 30/10/2020
OKEx (Futures) BTC-USDT-201106 -0.504 0.11 11,055,700 125,303,682 6/11/2020
Huobi Futures BTC_NW -0.233 0.12 16,227,800 122,393,069 30/10/2020
OKEx (Futures) BTC-USD-201106 -0.430 0.10 12,544,900 115,064,896 6/11/2020
Huobi Futures BTC_CW -0.096 0.10 21,961,800 114,432,660 30/10/2020
Binance (Futures) BTCUSD_201225 -1.986 0.10 48,112,200 110,894,049 25/12/2020
OKEx (Futures) BTC-USD-210326 -3.645 0.10 71,743,300 102,677,840 26/3/2021
CME Bitcoin Futures BTCX0 0.000 0.00 0 71,220,600 27/11/2020
Huobi Futures BTC_NQ -0.964 0.10 65,511,200 67,928,820 25/12/2020
Binance (Futures) BTCUSD_PERP -0.099 0.11 1,635,700 62,305,943 25/12/2100
Huobi Futures BTC_NW -0.361 0.12 5,376,400 57,892,595 6/11/2020
BitMEX XBTZ20 -0.572 0.10 146,060,987 48,346,619 25/12/2020
Huobi Futures BTC_NQ -3.524 0.12 31,295,900 45,776,940 26/3/2021
Deribit BTC-25DEC20 -1.946 0.14 89,200,300 38,248,384 25/12/2020
BitMEX XBTH21 -1.081 0.10 86,734,705 23,913,803 26/3/2021
Binance (Futures) BTCUSD_210326 -4.333 0.10 19,661,300 20,423,889 26/3/2021
FTX (Derivatives) BTC-1225 -1.744 0.12 38,294,185 14,289,166 25/12/2020
Deribit BTC-26MAR21 -3.829 0.17 44,205,160 10,514,560 26/3/2021
CME Bitcoin Futures BTCZ0 0.000 0.00 0 9,646,950 24/12/2020
FTX (Derivatives) BTC-0326 -4.213 0.16 47,970,157 5,812,945 26/3/2021
Kraken (Futures) FI_XBTUSD_201225 0.030 0.19 0 5,081,769 25/12/2020
Kraken (Futures) FI_XBTUSD_201030 0.015 0.22 0 4,761,437 30/10/2020
Deribit BTC-25JUN21 -5.855 0.13 23,573,640 4,689,965 25/6/2021
Kraken (Futures) FI_XBTUSD_210326 -0.152 0.24 0 1,054,929 26/3/2021
BitMEX BCHZ20 3.976 0.40 5,572,725 969,518 25/12/2020
BTSE (Futures) BTCV20 0.156 0.21 20,594,753 959,736 30/10/2020
Kraken (Futures) FI_BCHUSD_201030 0.334 0.37 0 864,970 30/10/2020
BTSE (Futures) BTCZ20 0.451 0.53 19,493,135 727,306 25/12/2020
CME Bitcoin Futures BTCF1 0.000 0.00 0 461,475 29/1/2021
CME Bitcoin Futures BTCG1 0.000 0.00 0 322,500 26/2/2021
KuCoin Futures XBTMZ20 -2.368 0.15 41,862 141,513 25/12/2020
KuCoin Futures XBTMH21 -3.754 0.15 7,012 134,123 25/3/2021
Kraken (Futures) FI_BCHUSD_201225 0.374 0.33 0 101,185 25/12/2020
CME Bitcoin Futures BTCH1 0.000 0.00 0 64,250 26/3/2021
CME Bitcoin Futures BTCZ1 0.000 0.00 0 57,500 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
CoinTiger (Futures) BTCUSDT -0.004 0.10 0.01000 602,974,238 306,070,711
Binance (Futures) BTCUSDT -0.042 0.10 0.01000 602,827,750 3,063,385,273
Bybit BTCUSD 0.022 0.10 0.01000 518,062,158 909,833,485
BitMEX XBTUSD -0.034 0.10 0.01000 371,369,831 1,148,222,729
FTX (Derivatives) BTC-PERP 0.044 0.10 0.00480 240,019,284 467,375,937
Huobi Futures BTC-USD -0.023 0.10 0.01000 211,259,000 1,263,442,903
Deribit BTC-PERPETUAL -0.049 0.10 0.01042 152,959,300 228,804,900
OKEx (Futures) BTC-USD-SWAP 0.024 0.10 0.02515 127,051,700 391,301,933
Prime XBT BTC/USD 0.000 0.18 0.00000 117,704,470 474,136,131
BitZ (Futures) 101 0.047 0.11 0.00000 108,280,081 543,936,315
BTCMEX BTCUSD 0.053 0.00 0.01000 86,953,210 782,996,983
Bitfinex (Futures) TBTCF0:USTF0 0.100 0.11 0.00000 84,616,648 8,511,224
BTSE (Futures) BTCPFC -0.015 0.12 0.00000 82,932,455 220,820,476
Bybit BTCUSDT -0.073 0.10 0.13160 67,557,510 101,157,287
Phemex (Futures) BTCUSD -0.134 0.10 0.01289 66,952,431 433,667,583
Binance (Futures) BTCUSD_PERP -0.060 0.10 0.01000 55,448,800 141,892,431
Kraken (Futures) PI_XBTUSD 0.056 0.16 -0.00111 39,111,384 65,146,858
Phemex BTCUSD -0.058 0.10 0.05913 31,597,323 341,056,663
KuCoin Futures XBTUSDTM 0.009 0.11 0.00000 30,237,940 28,281,816
MXC (Futures) BTC_USDT -0.041 0.10 0.04070 26,903,769 34,824,131
Gate.io (Futures) BTC_USDT 0.008 0.00 0.01000 26,641,383 71,003,738
Bitforex (Futures) SWAP-USD-BTC 0.012 0.10 -0.01700 23,382,213 387,367,956
ZBG Futures BTC_USD-R 0.000 0.11 0.00000 17,048,305 6,097,489
KuCoin Futures XBTUSDM -0.038 0.11 0.00000 15,543,062 34,017,805
Hopex BTCUSDT 0.032 0.00 0.00000 14,083,539 447,090,482
AAX Futures BTCUSDFP -0.002 0.11 -0.03000 7,448,832 138,752,950
BaseFEX BTCUSDT -0.228 0.14 0.17056 6,191,988 6,232,042
BitZ (Futures) 1 -0.012 0.10 0.00000 5,540,660 27,987,233
BitZ (Futures) 201 0.036 0.12 0.00000 5,532,992 28,115,238
Gate.io (Futures) BTC_USD -0.051 0.00 0.01000 5,401,699 13,176,788
BitMEX BCHUSD -0.041 0.12 0.03400 4,825,568 18,153,751
Kumex XBTUSDM -0.052 0.11 0.01000 4,542,007 12,254,524
Hopex BTCUSD -0.016 0.00 0.00000 4,054,720 9,219
Kumex XBTUSDTM 0.058 0.11 0.01000 1,999,642 1,926
Kraken (Futures) PI_BCHUSD -0.074 0.17 -0.06027 1,757,082 3,065,113
BaseFEX BTCUSD -0.281 0.13 0.17905 1,687,981 913,793
dYdX Perpetual PBTC-USDC 0.304 0.17 0.00000 1,595,331 260,637
Bithumb (Futures) BTC-PERP -0.099 0.13 0.04236 1,300,023 7,381,074
DueDEX BTCUSD -0.031 0.00 0.01000 1,239,235 13,740,474
BitMax (Futures) BTC-PERP -0.085 0.00 0.02953 1,130,615 2,150,519
MyCoinStory BTCUSDT 0.062 0.11 0.01000 882,316 34,537,868
DueDEX BTCUSDT -0.046 0.00 0.01130 290,265 1,602,095
BigONE Futures BTCUSDT -0.007 0.10 0.01000 185,020 55,083,165
BigONE Futures BTCUSD -0.124 0.12 0.12663 70,023 32,573,168
AAX Futures BTCUSDTFP 0.007 0.11 0.00131 5,258 3,256,151
Biki (Futures) 28 -0.020 0.13 0.00997 0 4,057,314,709
Bitflyer (Futures) FX_BTC_JPY 0.000 0.11 0.00000 0 1,309,286,103
Bitget Futures CMT_BTCUSDT -0.006 0.11 -0.01000 0 970,142,697
Bitget Futures BTCUSD -0.009 0.11 -0.01000 0 802,402,898
Biki (Futures) 11 -0.022 0.10 0.00993 0 460,193,559
OKEx (Futures) BTC-USDT-SWAP 0.072 0.10 0.05178 0 348,448,876
Bitget Futures CMT_BTCSUSDT -0.000 0.11 -0.01479 0 197,366,680
Biki (Futures) 1 0.017 0.11 -0.00285 0 170,531,978
HBTC (Futures) BTC-PERP-BUSDT -0.030 0.10 0.00265 0 140,410,031
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
HBTC (Futures) BTC-SWAP -0.014 0.12 -0.00209 0 93,540,766
HBTC (Futures) BTC-SWAP-USDT -0.020 0.11 -0.00815 0 82,962,027
BitZ (Futures) 301 -0.005 0.11 0.00000 0 75,009,887
GMO Japan (Futures) BTC_JPY 0.000 0.10 0.00000 0 67,919,165
Bibox (Futures) 4BTC_USDT 0.000 0.10 0.00000 0 58,466,329
Biki (Futures) 16 0.027 0.11 -0.03174 0 43,147,817
HBTC (Futures) BTC-PERP-REV -0.033 0.11 -0.00190 0 31,425,858
Delta Exchange BTCUSD -0.013 0.12 0.01000 0 16,466,984
Biki (Futures) 25 -0.023 0.12 0.00998 0 15,249,112
Delta Exchange BTCUSDT -0.022 0.10 0.01000 0 13,941,762
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
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
CoinFLEX (Futures) BTC-USD-SWAP-LIN 0.000 0.00 0.00000 0 655,166
ZBG Futures BTC_USDT 0.000 0.00 0.00000 0 604,838
ZBG Futures BTC_ZUSD 0.000 0.00 0.00000 0 520,571
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
Liquid Perpetuals P-BTCJPY 0.877 0.15 0.16300 0 118,242
Liquid Perpetuals P-BTCUSD 0.805 0.34 0.21300 0 10,290
Binance JEX (Futures) BTCUSDT 0.848 0.96 0.01000 0 7,990
Biki (Futures) 2 0.017 0.13 0.08715 0 5,222
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) BBCXZ20 0.541 1.04 272 25,040 25/12/2020
BTSE (Futures) BBCXV20 0.877 0.33 195 11,997 30/10/2020

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) TBTCDOMF0:USTF0 -0.006 0.12 0.00000 22,452 238,101
BTSE (Futures) BDIPFC 0.178 0.17 0.00000 6,268 4,870

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.