“Long Only” is Dead. All Hail “Hedged Crypto” Strategies

By | Dec 04, 2018

“Long Only” is Dead. All Hail “Hedged Crypto” Strategies

Trading platforms all over are introducing the virtues of hedging downside volatility in cryptocurrencies. This is a natural evolution.

Many LI connections will recall my ramblings on the importance of developing exchange derivatives like futures, options, ETFs. Regulators may move slowly but markets don’t.

What exchanges appear to be ingeniously doing is cooking up some hedged-crypto home brew of their own and serving it up to customers. It’s a start.

The real beneficiaries of this are probably the market makers & exchanges who clean up on inefficiencies & high volumes. Then again: what would you pay to be hedged on BTC at $18,000 all the way down.

Markets evolve. The idea that you can make money in cryptos as a trader or hedge fund manager by buying the market and hoping it appreciates are over – at least for now and probably indefinitely. I know this may sound crazy to a lay person but as a bond trader for decades I made my living without any allegiance to prices going up or down. We specialized in spread relationships and benefited more or less from price swings.

As derivatives blossom a whole new industry will emerge & grow around professional trading. From a product standpoint, it’s still very early days.

2018-12-11T11:16:11-05:00December 4th, 2018|

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