Investors Hedging Betting the Value of Their Bitcoin

January 10, 2018 by Adrian Thorpe

investing in bitcoinsThere is always going to be the chance that the value of Bitcoin could nosedive at any moment, however there is always the chance the value of Bitcoin could suddenly skyrocket too.

You only have to look at the value and much more importantly the volatility of Bitcoin since its launch to realise that are far as an investment goes, you are going to be going on something of a roller coaster journey if you do decide to invest in any holding of that digital currency.

However, many Forex Brokers are now allowing their clients to place hedge bets on the value of Bitcoin over any given time period, and I have discovered that there is some value to be had of doing so.

How a Forex Broker will offer Bitcoin investor the chance of hedging the value of their Bitcoin holding is by allowing them to link Bitcoin up to any other fiat currency, and then place a wager in regards to just which way those traders think the value of Bitcoin will move again that other currency over a set time period.

So for example, if an investor is worried that over the course of 24 hours the value of their Bitcoin may decrease in value, then they will place a trade on the value doing just that, and if the value does decrease they will receive a winning payout on their hedge bet.

The value of the returns they will get from placing that hedge bet however are determined by how much they wager on it and also the payout odds offered by the Forex Broker.

Dangers of Hedge Betting on Bitcoin and Other Digital Currencies

The only problem when you place a hedge bet is that there are only ever going to be two possible outcomes of those best, one will of course be a winning outcome for you and the other will be a losing outcome.

As such you need to be aware that by placing a hedge bet on the value of Bitcoin or any other digital currency for that matter, you will run the risk of losing the entire amount of that hedge bet you placed.

You could of course guess the movement correctly and if so you will receive a winning payout, but keep in mind there is also the risk you will lose that bet too.

However, if you do place a winning hedge bet at any Forex Broker then the winning payout, if you placed enough cash o that bet, will cover the effect of the reduction in the value of your Bitcoin holdings.

But if that bet is a losing one then the increase in the value of your Bitcoin holdings will make up for the loss of that hedge bet! So as you can see there are some benefits to be had of you placing some hedge bets when you want to reduce the chances of you losing out when the value of Bitcoin or any other digital currency moves against you!

Are You Cut Out For Hedge Betting?

The only way to be able to accurately judge for yourself if you are cut out to be a hedge bettor in regards to placing bets against you chosen digital currency and any other will be for you to actually set about doing so.

That does not necessarily mean however that you are going to be forced to pay anything to be able to place such trades online, for you will be more than welcome to open up a demo trading account at a number of Forex Brokers.

By doing so you then try out a range of different digital currency hedge betting pairings at no risk but they will be placed in the real life environment, the only different between using a demo trading account and a real money one is the former pays out demo credits whilst the latter does of course pay out real money credits.

By setting aside some time to learn how to use a Forex Brokers trading platform you will get a good feel for the way that each Forex Brokers many different trading opportunities and platforms do work and will also get firsthand experience of placing digital pairings trades too.

It will then be up to you and you alone as to whether it is something you are prepared to do for real money as and when the time arrives to help you reduce or even negate any possible losses in regards to the value of any Bitcoin or other digital currency you have interested in!