Bitcoin price has seen a strong bull run over the past few months. The price has increased more than 500% since January 2018 and reached an all-time high of $20,000 in December 2018.
However, some fear that this rapid price increase will lead to increased volatility and could threaten market stability. This is because the options available to bitcoin traders are limited to hedge their positions against any potential losses and minimize their exposure to potential gains.
One solution is to use derivatives such as futures or options that allow traders to take positions in the underlying asset without owning it or physically holding bitcoins themselves. However, these contracts require cash from the underlying asset (bitcoins) to be valid and thus reduce their overall value if there is no volume traded on them by investors looking for them. how to hedge risk or profit from price. movement in both directions.