Can a Cash-Settled Futures Contract Still Be Used for Hedging Purposes? ▴ Learn

Can a Cash-Settled Futures Contract Still Be Used for Hedging Purposes?

Yes, absolutely. Hedging is primarily about mitigating price risk, which a cash-settled contract achieves by locking in a future sale or purchase price.

For a miner, selling a cash-settled contract hedges against a drop in Bitcoin price, and the final cash settlement offsets the loss in the physical inventory value. Physical delivery is not required for effective price risk management.

How Is the Final Settlement Price for Cash-Settled Cryptocurrency Futures Determined?

What Is the Primary Difference between Cash-Settled and Physically-Settled Crypto Futures?

How Does the Margin Requirement Differ for Physically-Settled versus Cash-Settled Futures?

Can a Transaction with a Low Gas Fee Still Be Front-Run?