Hedging in cryptocurrency involves taking measures to reduce risk associated with price fluctuations. Investors use various strategies to protect their assets from potential losses. One common method is through derivatives like futures and options. By entering into these contracts, investors can lock in prices for future transactions, ensuring they can sell or buy assets at a predetermined price, regardless of market changes.Another approach involves diversifying a portfolio. By holding different types of assets, an investor can mitigate the impact of a sharp decline in any single asset. For instance, if a person holds Bitcoin and Ethereum, a drop in Bitcoin’s price might be offset by stability or gains in Ethereum’s value.Short selling is also a tactic for hedging. By borrowing and selling an asset with the intention of buying it back at a lower price, investors can profit from downward price movements.Overall, the goal of hedging is to minimize the risks associated with investing and to protect capital, enabling investors to navigate the often-volatile crypto market more safely.