Hi all, I am a crypto currency day trader and I need to hedge the value of my XBT balance vs slump in XBT/USD price. Nearly all my trades are altcoins vs XBT so I need to keep a substantial portion of my portfolio in XBT. But no matter how successful my trades are if the XBT declines vs USD I am in the red. So my idea is to have a long XBT position at the coin exchanges where I trade and to have a XBT/USD short position at a crypto futures exchange (e.g. BitMEX). When XBT price goes up, I will profit in my long position and will sell some XBT to cover the loss of my short position. When XBT goes down, I will profit in my short positon covering the dimished value of my XBT trading balance. Can I do such a hedging on BitMEX and how much is it going to cost me (including fee for opening a short position, margin fees and interest rates fees for the capital needed for the short position)?
Bitcoin hedging question: I'm obviously concerned about bitcoin's future, and that has nothing to do with the current TA jitter. I'm not talking about technicals, I'm just astounded at the slow/nonexistent development and innovation as the community has hamstrung itself. Most developers have been removed by "core" devs or actively removed themselves as they were not able to contribute, and any single adjustment to the protocol moves at a glacially slow pace while competitor coins are nimble and innovative. The few existing changes to the protocol seem clunky and complex with little value-add. Some seem detrimental, and crazy ideas like eliminating Asicboost are being bandied about. Bitcoin devs are playing central banker, and that terrifies me. That's just my opinion, you don't have to agree or disagree - just my background. So i still see a possible path forward for BTC (especially with the halving), but am also concerned about its growing risk of failure. Hedge BTC without exposure: in the event of a BTC bubble, alts will follow. in the event of a BTC decline, alts will rise. We've seen that BTC and alts are negatively correlated in chop, but in a bubble, the entire crypto market moves in sync. I just don't see any reason to be in BTC right now; alts offer upside in both bearish and bullish BTC environments. Comments?
The official bitshares client will be able to send and receive bitcoin from next week! Decentralized bitcoin hedging is here!
I've heard from a bitshares core dev that the shapeshift API will be integrated directly in the official bitshares full node possibly as early as next week, and will also be included in the light wallet (still in beta). This is huge for both bitcoin and bitshares! This means that you can now use BitShares as a decentralized hedged bitcoin wallet. You can receive bitcoins from an exchange or from your friends, and hold it in bitUSD, and then send it out again to a bitpay integrated merchant, or lighthouse, or a bitcoin debit card or wherever else you want. All done exactly the same way as you send bitcoins normally using normal bitcoin addresses, except that while you hold the bitcoins they are hedged against volatility so if you send in 100 USD worth of bitcoin you will be able to send out 100 USD worth of bitcoin as well at any point in the future. All this is done without counterparty risk, you hold your own private keys at all times, and you need zero AML, zero anti-terrorism anal probes, and there's no way your money can be seized or frozen - just like bitcoin was always meant to be. It's this kind of feature that is going to make bitcoin go mainstream. If anyone can hold and use bitcoins without having to worry about volatility we will begin to see an increasing amount of people shifting their money into crypto. As bitcoin is the onramp and offramp for all cryptocurrency, and is the payment rails on which cryptocurrency will be spent, the more money that goes into crypto as a whole the more bitcoin benefits. Bitcoin is already the most convenient way to spend your money in the whole world, with the addition of decentralized volatility hedging by consumers there's no reason why all commerce shouldn't go through the bitcoin network. BitUSD itself will never be a threat to bitcoin as a payments system. No merchant is ever going to accept BitUSD since it's so much easier to accept bitcoin since it has all the infrastructure and enables you to accept bitUSD as well, so bitcoin and bitUSD will never have to compete, but can instead grow side by side. I know there's still going to be plenty of people who insists that bitUSD is a shitcoin and is useless for anything, but i hope some people will be able to realize that it is something that complements bitcoin rather than competes with it, since it will never be able to match the branding and network effect of bitcoin, but can help with consumer adoption. As the USD starts to seriously tank it will also be possible to hedge your bitcoins to other assets, such as gold (using bitgold), so until bitcoin itself has become big enough to remove volatility there will be plenty of options to enable people to use it without volatility concerns. The BitShares ecosystem also has a lot more to offer bitcoin as well. Bitshares has blockchain registered names that are compatible with bitcoin addresses (because bitshares uses the same type of private keys as bitcoin), so in the future we might be able to send bitcoins to human readable names instead of incomprehensible public keys, another important step that will help with mainstream adoption. Another thing are the paid delegates. Bitshares' "miners" get paid a salary in order to improve and develop the system and blockchain. But as bitshares begins to have more money at the disposal of delegates this method of funding can also begin to benefit bitcoin (since bitcoin adoption and merchant acceptance benefits bitshares directly). Instead of having the bitcoin foundation controlling the bitcoin core developers, some of the core developers could be bitshares delegates and be funded in a completely decentralized manner in order to protect and grow both ecosystems. If the cryptocurrency space (and thus also bitshares) grows enough to afford it we could also see things like lighthouse delegates that use their delegate pay to support open source lighthouse projects that benefits both ecosystems - systems like bitsquare are the future for all cryptocurrencies and it is important they are well funded if we are to succeed. Finally there's the decentralized exchange itself, which is what BitShares was always meant to be (the whole concept was in fact conceived by the lead dev after mtgox had its funds seized in 2013). It's still not widely used, but bitshares has a bitasset for bitcoin as well, called bitBTC. With BitBTC you can trade the price of BTC and USD directly on the blockchain without any sort of counterparty risk, and as soon as you want real bitcoin again you can convert them instantly through a gateway like meta-exchange or shapeshift (if they add bitBTC in the future). The hope is that one day all bitcoin trade can be done entirely without centralized institutions, making the entire cryptocurrency ecosystem completely immune from ben lawsky and regulatory crackdown. One last thing before someone calls me out on it, regarding the counterparty risk. Since shapeshift has momentary control of your funds it isn't actually completely free from counterparty risk, however the risk is greatly reduced from other systems like coinbase, bitstamp or paypal that just hold all your funds outright. The worst shapeshift can do is to steal the volume they process over a period of time until the community is alerted. Because the payoff is so low you can be guaranteed it will never happen (assuming they seek profit). Lets assume they take 0.1% fees and will be able to steal 1 hours worth of volume before people stop sending them money (there will likely be automatic alert systems in the wallets making the time significantly less). This means that they will at best be able to steal 40 days worth of income, but lose all future income as a result. It should be obvious that this will never be worth it, especially considering the fixed costs they have put into establishing the business.
A question to traders: bitcoin hedging and its demand
if bitcoin investment can be hedged for a greater risk, such as 50% more risk invest 10btc, if btc rises 20%, you get 30% return or if btc falls 20%, you lose 30% is there demand for this? If this is attractive, we will see many million dollar investment firms offering hedging against btc
Hedging. Hedging is simply a protective measure to ensure that your money is never wasted. As you already know, that bitcoins are volatile, the amount fluctuates depending on the market. As a defensive measure, you need to hedge your bets to be on the safer side. How Hedging Works In Bitcoin Futures. Many traders think they understand hedging strategies in cryptocurrency futures. But the truth is, the concept is as intriguing as the word itself. And with the strange correlations of March in Bitcoin and stock markets, Peters said that the fortnight’s losses for Bitcoin was indeed an outcome of positions being liquidated by professional traders, but that this weak hand selling would eventually give way to Bitcoin as a hedging asset. He explained: 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 Speculations and Hedging. One of the most significant advantages of Bitcoin Options trading is that investors can tap into the profit potential without taking many risks compared with buying the underlying bitcoin. In options trading, investors and traders pay a premium when trading. Notice that in both put and call options, the trader is not
Arthur Hayes explains why Bitcoin companies should not try to be hedge funds, and how to hedge your bitcoin positions. If you want to trade Bitcoin futures or if you want to hedge your Bitcoin HODL position, there is nothing wrong with swing trading Bitcoin futures and taking short positions if you have a strategy. In this video I talk about Bitcoin hedging, tools to use when crytpo trading, and the cryptocurrency potential. Bitcoin was envisioned to make the banking sector obsolete, but one potential hedge ... Today we're talking about the concept of Bitcoin as a hedge against the US Dollar. One of the really interesting things we believe about Bitcoin, in general, is its consideration in the current ... Hedging Bitcoin with Futures - How to Protect Your Long Term Crypto Investments During a Downturn - Duration: 10:23. Pro Trading Mentors 5,313 views