Crypto hedging: protect the downside without selling

What is crypto hedging?

Hedging means taking a position intended to offset part of the downside of an asset you hold. If the asset falls, the protective position is designed to reduce the impact. If it rises, you keep the upside on the part you didn't cover.

Why hedge instead of selling?

Selling ends your exposure — and your upside. Hedging keeps your assets while limiting how far a fall can hurt. It is a trade-off: you give up some upside in exchange for a defined downside limit.

How a short hedge works

A protective short position is sized against part of your exposure. When the market rises, the hedge loses value; when it falls, the hedge gains. The amount you cover is your coverage. A 100% coverage target does not mean zero loss — it means the hedge is sized to offset the covered part of the exposure.

Coverage percentage

You choose how much of an asset to protect: 25%, 50%, 75%, 100%, or a custom whole percentage from 1–100%. Coverage is a decision about how much to protect, not a form of leverage or borrowing.

Protection trigger

The protection is set to activate around your protection level. As the market moves, the protection logic can adjust the level upward to help preserve gains — an automatic adjustment, not an ongoing manual task.

Collateral and protection capital

Protection requires capital. The protection uses an operating buffer so it can stay healthy as the market moves. Initial targets are expressed against the required hedge collateral (110% in standard mode, 120% in enhanced mode; the ongoing minimum is 110%). This is protection capital, not a SaveMyCrypto fee.

Stop-loss costs and funding

When a protective stop executes, the position is closed at a price set by the rules — this can produce a realized cost. Funding may also be paid or received while a hedge is held. These are the real costs of protection.

Capital calls

Because protection capital must stay above the required buffer, you may occasionally be asked to add funds. This is a normal part of keeping protection healthy, not a penalty or an automatic liquidation trigger.

Risks and limitations

Hedging is not risk-free. It reduces downside but does not remove it; a stop can cost money; funding applies; and outcomes are never guaranteed. Protection is not the same as selling.

How SaveMyCrypto simplifies it

You connect your portfolio (read-only), see what can be protected, choose your assets and coverage, fund the protection, and SaveMyCrypto handles the automated execution — while your assets stay in your wallet.