Are There Specific Types of Institutions That Are More Likely to Engage in Hedging Activities?

Yes, certain types of institutions are more likely to engage in hedging activities in the cryptocurrency market. Crypto mining companies often hedge their future revenue by selling futures contracts to lock in a price for the coins they will mine.

Crypto-focused hedge funds and proprietary trading firms may hedge their portfolios to manage risk or to execute complex, market-neutral strategies. Asset managers and venture capital firms that have large, illiquid positions in cryptocurrencies may also use derivatives to hedge their exposure.

Finally, companies that hold cryptocurrencies on their balance sheets may hedge to protect against volatility.