The four most famous international exchanges:

Binance INTL	OKX INTL	Gate.io INTL	Huobi INTL
China Line　APP DL	China Line　APP DL	China Line　APP DL	China Line　APP DL

Note: The above exchange logo is the official website registration link, and the text is the APP download link.

The cryptocurrency spot market is like your traditional market, where commodities, currencies, stocks, and bonds can be bought and sold instantly. For example, Bitcoin trading in the spot market occurs when traders match buy and sell orders. The futures market is like an auction market where traders buy and sell cryptocurrency futures contracts for delivery on a specified date in the future. Crypto futures are a type of financial derivatives contract that binds two parties to trade an asset at a predetermined price and date in the future. The buyer or seller must buy or sell the underlying cryptocurrency at a set price, regardless of the asset's current spot price on the contract's expiration date. . So will contract hedging lead to liquidation? Let the editor of the currency circle reveal the contract hedging and arbitrage techniques for everyone.

## Will contract hedging lead to liquidation?

You must know that strict hedging will not result in liquidation of the position unless the product has no value and the Bitcoin contract does not exist. With extra margin, you can also open long positions to earn profits. Everyone must be optimistic about the macro situation and the overall market, do not miss big opportunities, and strictly control positions, and do not be greedy, because the contract itself is amplified and risky.

When it comes to Bitcoin contracts, I believe that in the eyes of most people, this is almost an impossible event! On the contrary, from another perspective, this also shows that most of these friends are just junior players and do not really understand the market gameplay of Bitcoin contracts. You must know that the entire derivatives route of Bitcoin is now very complete, which means that a variety of risk hedging can be realized. In addition to the common spot + options hedging, there are also hedging between futures + options.

## What is a contract?

Bitcoin futures are futures contracts involving the asset Bitcoin. If an investor speculates that the price of Bitcoin will rise in the future, he/she will sign a futures contract with a Bitcoin seller to purchase Bitcoin at a predetermined price. This means that the buyer can only receive Bitcoin from the seller when a predetermined agreed price is reached.

On the other hand, if an investor speculates that the price of Bitcoin will fall in the future, he/she will sign a futures contract with a Bitcoin buyer to sell Bitcoin at a predetermined price. This means that the seller can only sell Bitcoin to the buyer when a predetermined agreed price is reached.

When you buy (or go long) a Bitcoin futures contract, you enter into an agreement to receive an agreed-upon number of Bitcoins or an equivalent amount of currency based on the agreed settlement of the contract. However, since most exchanges only allow cash settlements, a Bitcoin wallet is not a necessity since participants receive cash in return rather than physical Bitcoins.

The above content is the final revelation by the editor of the currency circle on the question of whether contract hedging will liquidate the position. For many institutional investors, futures contracts are not enough. Fear of market manipulation has kept a large number of financial institutions and investors away from the cryptocurrency futures market. If the contract is a cash futures contract (meaning the entity holding the contract bets on the price of the asset and the contract is settled in cash rather than the asset itself), holding a large amount of that asset could theoretically influence the price of the asset in a favorable direction . Imagine that everyone is betting that the price of Bitcoin will drop by 10% when your contract expires, effectively selling it all at once.