Using CoinEx dual-currency investments for risk hedging is essentially building a “paid insurance” strategy: you forgo a portion of potential upside profits (or bear some downside risk) in exchange for certain cash flow returns, thereby buffering or offsetting potential losses faced by your spot holdings during market fluctuations. This doesn’t eliminate risk, but rather replaces one unpredictable risk with another, more controllable and quantifiable one.
The most classic hedging application is for the risk of price declines in spot holdings. Suppose you hold 1 Bitcoin at a cost of $60,000, and the current market price has fallen to $55,000. You’re worried about further declines but don’t want to sell entirely and miss the rebound. In this situation, you can invest a portion of your position (e.g., 0.2 BTC) in CoinEx Dual Investment, choosing a 14-day bullish product with an execution price of $58,000 (slightly higher than the current price). This product may offer an annualized return of up to 25%. There are two possible outcomes at maturity: If the Bitcoin price is below $58,000, you will receive 0.2 BTC back and approximately 0.00192 BTC in interest, which directly increases your Bitcoin holdings and slightly dilutes your cost basis. If the price is above $58,000, your 0.2 BTC will be sold at $58,000, yielding 11,600 USDT plus interest, locking in some profit and recovering cash. In either case, you gain a “buffer” through interest income, hedging against some potential losses or locking in some profits.
For investors planning to buy the dip but worried about buying in the middle of a downtrend, dual-currency investment offers a “limit buy order with yield” feature. For example, if you have 10,000 USDT ready to buy Ethereum when it drops to $2,000, but the current market price is $2,500, you can invest it all in a 30-day put dual-currency product with a $2,000 strike price, potentially yielding an annualized return of 12%. At maturity: If the Ethereum price is below $2,000, you will automatically buy 5 ETH at $2,000 each, earning an additional approximately 98.63 USDT in interest, achieving a lower cost purchase. If the price is above $2,000, you will receive back your 10,000 USDT principal and earn 98.63 USDT in interest, using this return to wait for the next opportunity. This is equivalent to adding a 12% annualized “waiting allowance” to your pre-set buy order during a market downturn.
At the portfolio level, dual-currency investment can achieve risk diversification and enhanced cash flow. You can allocate 20%-30% of your portfolio to a series of dual-currency products with different underlying assets, different strike prices, and maturity dates. For example, you can set up different strategies for BTC, ETH, and SOL simultaneously: a conservative bullish strategy with a strike price 15% higher than the market price for BTC to earn a very high probability of a 5% annualized return; and a strategy with a strike price close to the market price for the more volatile SOL to aim for a high 40% annualized return but bear a higher exercise risk. This constructed “strategy basket” can continuously generate cash flow under different market scenarios, smoothing the overall portfolio’s net asset value curve. Historical backtesting shows that during periods of market sideways movement or a gradual decline, this strategy portfolio can provide an additional annualized return of 3%-8%, effectively reducing the overall volatility of the portfolio.
The core of hedging also lies in the active management of market volatility. When the market experiences a surge in the fear index (similar to the VIX) due to unexpected events (such as the 2022 LUNA crash or major regulatory news), implied volatility may surge by more than 100% in the short term. At this time, the annualized return provided by dual-currency investment will correspondingly increase. Savvy investors will take advantage of this opportunity to sell the high volatility premium. For example, immediately setting up a bullish dual-currency position far from the current price after a market panic sell-off could capture an extremely high annualized return of over 50%. This certain return is a valuable “risk premium” compensation for hedging against the risk of further disorderly and sharp market declines in the future.
Importantly, with CoinEx Dual Investment hedging, the maximum risk and return are completely locked in at the moment of investment, eliminating the possibility of liquidation or unlimited losses. Your primary risks are “opportunity cost risk” and “reinvestment risk.” For example, during a market surge, your bullish dual-currency positions may be exercised, forcing you to sell assets below market price and miss out on some of the profits. However, the fixed interest you receive compensates for this risk. Managing this risk hinges on position sizing and strategy adjustments: avoid allocating all your funds to a single bullish or bearish strategy, and instead dynamically adjust based on market conditions. In a clear bull market, reduce the proportion of bullish dual-currency positions or significantly increase their strike price; in a clear bear market, increase the allocation of bearish dual-currency positions or lower their strike price.
Therefore, integrating CoinEx Dual Investment into your risk management framework is like installing an adjustable “shock absorber” for your portfolio. It doesn’t aim to predict market tops and bottoms, but rather, through sophisticated product design, transforms your anxieties about market direction into a contract with clear returns and limited risk. It provides interest compensation when the market falls; it pays you for waiting while you wait to buy; and it becomes a stable source of income during market volatility. This mindset of transforming risk into a calculable, tradable asset is a powerful tool that modern financial engineering provides to every ordinary investor.