Hedging
Taking an offsetting position to reduce the risk of loss on something you already hold.
A miner expecting 10 BTC next month can short 10 BTC of futures today, locking in a price regardless of where spot goes. If Bitcoin drops, the short gains roughly what the holdings lose.
Hedging isn't about profit. It's insurance, and like insurance it has a cost in fees and forgone upside. Funds and treasuries use it to survive volatility; retail traders often skip it and ride the swings.
Related terms
Financial contracts whose value comes from an underlying asset rather than from holding the asset itself.
FuturesContracts to buy or sell an asset at a set price on a future date, often traded with leverage.
Short SellingBetting that a price will fall by selling an asset you don't own, then buying it back cheaper.
VolatilityA measure of how sharply and how often a price swings, in either direction, over time.