How Are Options Used to Hedge a Long-Term Cryptocurrency Spot Position?

Investors holding a long-term cryptocurrency spot position (e.g. owning Bitcoin) can use Put Options to hedge against potential price declines. By purchasing a Protective Put, the investor secures the right to sell their crypto at the Put's strike price, locking in a minimum selling price.

This strategy limits the downside risk while allowing the investor to retain the full upside potential of their spot holdings, minus the cost of the option premium.