Dollar hedging

Why do we need dollar hedging?

Bitcoin (BTC) can be quite volatile at times. Sometimes it can drop -15% in a matter of weeks and after a month we could be incurring a huge loss, not because we are investing in BTC but because holding deposits are kept in BTC to trade in other cryptocurrencies.

This was one of the drawbacks of using third party bots such as 3Commas, where total earnings were going down despite bots making profits. This can be offset using tether coins. Say if we trade SAND/BTC, if SAND goes up, and BTC also goes up, you will end up seeing a loss, while with real currencies like GBP or USDT, you will see a huge profit. That’s BTC eating up all the increase of SAND.

To avoid this side effect of using BTC or any other ALT coin which can equally be volatile, as the market often moves together with BTC, we take advantage of Exchange’s option to put money into cryptocurrencies that are pegged to a real currency. Currently the only supported cryptocurrency pegged to a real currency is USDC (approved by EU).