The role of futures in a diversified crypto portfolio

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In the face of high volatility in the cryptocurrency market, investors are looking for tools to hedge risks and increase returns. Investors include cryptocurrency futures contracts in diversified portfolios to manage exposure and apply various trading strategies. In addition, the crypto asset futures market is one of the fastest growing in 2024–2025. According to Binance Research, the total futures trading volume exceeded $30 trillion in 2024.

Futures as a Hedging Instrument

There are many derivatives platforms on the market, including solutions for retail and institutional traders. For example, PrimeXBT crypto futures allow trading cryptocurrency futures with multi-asset margins, which gives flexibility in portfolio management. Such platforms offer tools for both hedging and speculation, including advanced orders and analytics. Futures allow investors to lock in the price of an asset at a future date, which is especially useful during periods of market volatility. For example, if an investor expects the price of Bitcoin to fall, they can open a short position on a futures contract, offsetting potential losses on spot assets.

Since early 2024, major trading platforms have introduced dual exposure modes (Hedge Mode), allowing you to hold long and short positions on the same asset. It is vital for active trading and when using market neutrality strategies. 

Futures for Portfolio Diversification

Adding futures to a portfolio helps diversify it. According to EY research, more than 80% of institutional investors view cryptocurrencies as a key tool for portfolio diversification.

Futures allow investors to gain exposure to various crypto assets without having to own them directly, reducing operational risks and simplifying asset management. They also allow for flexible capital allocation strategies, from a moderate BTC/ETH long to hedging positions in more volatile altcoins.

Examples of Using Futures

1. Hedging risks: An investor who owns a significant amount of ether expects a short-term decline in its price. Opening a short position on the ETH/USD futures contract allows you to compensate for possible losses from a decrease in the asset’s value.

2. Speculative strategies: A trader, analyzing technical indicators, predicts an increase in the price of bitcoin. Opening a long position on the BTC/USD futures contract using leverage can lead to increased profits if the forecast is realized.

3. Arbitrage Opportunities: The price difference between the spot market and futures contracts creates arbitrage opportunities. Buying an asset on the spot market and simultaneously selling a futures contract allows you to lock in a profit when prices converge.

4. Portfolio Risk Redistribution: In 2025, we see an increase in the use of futures as part of balanced multi-asset crypto portfolios. For example, combining a long position in BTC with hedging short positions in high-risk altcoins helps limit drawdowns during market turbulence.

Perpetual Futures and Classic Contracts

There are two key types of crypto futures: classic futures with a set expiration date and perpetual futures (perpetual contracts), which have no expiration date. The latter have become particularly popular, especially on exchanges like Binance and Bybit, due to their high liquidity and ease of settlement via the funding rate. According to The Block Research, as of early 2025, perpetual contracts account for more than 85% of futures volume. That makes them a foremost component in planning trading strategies and margin management. 

Risks and their Management

Despite the benefits, futures trading comes with certain risks:

  • Leverage: Increases both potential profits and possible losses.
  • Position liquidation: In case of unfavorable market movement, positions may be forcibly closed.
  • Volatility: Cryptocurrency markets are subject to sharp price fluctuations.
  • Margin imbalances: During periods of market stress, exchanges may increase margin requirements, making it more complicated to manage a position.

To effectively manage risk, use stop orders, limit position sizes, set loss limits, and regularly review strategies depending on the market situation. Stress tests and portfolio simulations under volatility are also useful.

Institutional Interest and Strategies for 2025

According to Bitwise and Fidelity Digital Assets, more than 60% of institutional cryptocurrency portfolios in 2024–2025 include futures instruments, especially on BTC and ETH. This is due to their high liquidity, the presence of regulated markets (e.g., CME), and the ability to build risk-adjusted return strategies. In particular, calendar spreads, cross-asset hedges, and systemic trend strategies with partial hedging are popular.

For 2025, analysts identify three key areas of crypto futures use:

●  long-term hedging of the main assets in the portfolio;

●  speculative trading with limited risk (through stop-loss/limit systems);

●  structuring a “margin core” – a set of derivative positions that provide alpha with managed risk.

Examples of market events in 2024

In 2024, the launch of a spot ETF on Ethereum caused a sharp increase in ETH futures trading. Open interest increased by more than 70% in two weeks, and the funding rate briefly went into negative territory, which provided an opportunity to enter arbitrage positions. Such events highlight how sensitive futures markets are to regulatory and institutional news. Successful traders use such moments to speculate or hedge.

Conclusion

Cryptocurrency futures are a powerful tool for hedging risks and diversifying an investment portfolio. In 2025, amid a tightening regulatory environment and growing participation of institutional players, the futures market continues to mature. Derivatives allow traders and investors to react to price fluctuations and build balanced strategies with predictable results. 

Using futures wisely can increase portfolio resilience and provide access to many opportunities in the crypto market. However, it is paramount to be aware of the risks, carefully manage leverage, and monitor changes in market infrastructure and regulations.

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