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Arbol, a platform that allows farmers to hedge weather risks, is integrating Chainlink data oracles. With blockchain, settlements and payouts can be instant, whereas in the centralized world, participants may have to wait weeks, if not months. Farmers can hedge against various adverse weather conditions having a negative impact on their crops. They can buy a hedge - for example, if a temperature in their region reaches a critical level, which will trigger an automatic payout. By adding Chainlink's oracalized weather data feeds, the company's platform has become more decentralized and resilient.

Last year, JP Morgan began using machine learning to hedge a portion of its vanilla index options flow book. Next year, the bank plans to roll out similar technology for hedging single stocks, baskets and light exotics.

Our empirical results show that traditional assets such as global equities and global bonds are weak hedges for Bitcoin. Furthermore, we observe that gold acts as a strong hedge against Bitcoin during an extreme bearish Bitcoin market, although the impact is marginal.

Grayscale Investments has published a case study on how BTC could be used as a hedge against financial instability. The firm used the case of trade tensions between the United States and China to make their point.

A paper by the Harvard University's Matthew Ferranti explores the potential for Bitcoin to serve as an alternative central bank reserve currency asset to ex-ante hedge against the risk of financial sanctions. It uses a dynamic Bayesian copula model to simulate the joint returns of Bitcoin and other reserve assets under a wide range of plausible sanctions probabilities. Assuming mean-variance preferences, a modest risk of sanctions significantly increases optimal gold and Bitcoin allocations. If a central bank cannot acquire sufficient physical gold to hedge its sanctions risk, the optimal Bitcoin share rises further, suggesting that gold and Bitcoin are imperfect substitutes. It concludes that sanctions risk may diminish the appeal of US Treasuries, propel broader diversification in central bank reserves, and bolster the long-run fundamental value of both cryptocurrency and gold.

The International Swaps and Derivatives Association (ISDA) published the results of a study that demonstrates that hedging the most liquid crypto assets for which there is a two-way market, so-called Group 2a crypto assets (Bitcoin and Ether), with their respective futures or exchange-traded funds (ETFs), is effective. The paper also shows that the basis risk profile of Group 2a crypto-asset futures is comparable with that of existing financial assets. The capital treatment should therefore allow for offsetting for Group 2a crypto-assets and their futures and ETFs.

"Add algorithmic hedge funds to the list of suspects behind Tuesday's sudden surge in Bitcoin that had the true believers in the digital asset world heralding a renaissance in the most-popular cryptocurrency."

Grayscale experienced a 42% uptick in product inflows from $30.1M in 4Q18 to $42.7M in 1Q19, with hedge funds ramping up their investments, from less than $1M in 4Q18 to approximately $24M in 1Q19.

The cryptocurrency hedge funds that survived the 2018 market collapse lost almost half their assets, according to the most comprehensive accounting of its impact on the industr

Prime Factor Capital is the first crypto hedge fund approved as a full-scope alternative investment fund manager by the UK FCA. The firm will abide by European regulations under which the firm will be allowed to hold more than EUR 100 million in assets under management.

Some of the biggest players in finance, particularly hedge funds, are making a killing by investing in special-purpose acquisition companies (SPACs). Hedge funds give the SPAC money for up to two years while it looks for a merger target. In return, they get a unique right to withdraw their investment before a deal goes through that minimizes any loss on the trade. At the same time, the potential return for early investors is huge if the SPAC shares rise because they also initially receive shares and warrants giving them the right to buy more shares at a specified price in the future.

Actively managed cryptocurrency hedge-funds underperformed Bitcoin during the largest digital asset's bull run last year, according to Crypto Fund Research. The funds' average rate of return was 166%, compared with a more than 300% increase in Bitcoin. While the funds as a whole significantly underperformed, a few breakout managers that made long bets and invested in decentralized-finance projects exceeded the average.

JP Morgan analysts have concluded that the mainstreaming of crypto ownership is raising correlations with cyclical assets, potentially converting them from insurance to leverage. Over shorter intra-month and intra-quarter horizons, crypto-assets continue to rank as the poorest hedge for major drawdowns in global equities, particularly relative to the fiat currencies like the dollar which they seek to displace.

Grayscale Investments, which lets accredited investors own Bitcoin and other coins via its funds, said it took in $608 million last year, surpassing the total amount raised the previous six years. The majority of the inflows -- about 71% -- came from institutions like hedge funds, up from 66% in 2018, according to Grayscale.

Fir Tree Capital Management, a $4 billion hedge fund, is making a substantial 12-month short wager on Tether. Its thesis against Tether centers around the coin's roughly $24 billion in high-yield commercial paper, much of it the firm believes is tied to Chinese real estate developers.

Many industry participants have commented on how the gap in marketcap between Tether and its largest competitors has narrowed. However, the difference between USD₮'s 24hr trading volume and its competitors tells a clearer and more important story. For example, rather than catering to the traditional banking industry, Tether is focused on being the most used currency for peer-to-peer exchanges, remittances, a tool of freedom and inflation hedge for developing countries. This is why, while Tether's marketcap has decreased due to the billions of cash redemptions that it's effortlessly facilitated over the past several weeks, Tether's 24hr trading volume remains roughly 10x that of its closest competitor. This points to the utility of Tether in daily trading and is the true measure of adoption. The sheer scale of the integration of USD₮ into the financial plumbing of the crypto industry is an order of magnitude greater than its nearest competitor.

Bermuda's Longitude Exchange and Dedomainia, a technology company offering longevity swap solutions, are to collaborate on techniques and processes for monitoring, administering, and valuing index-based longevity risk hedging transactions.

"Motivated by the regional bank crisis of 2023, we model the impact of interest rates on the liquidity risk of banks. Prior work shows that banks hedge the interest rate risk of their assets with their deposit franchise: when interest rates rise, the value of the assets falls but the value of the deposit franchise rises. Yet the deposit franchise is only valuable if depositors remain in the bank. This creates run incentives for uninsured depositors. We show that a run equilibrium is absent at low interest rates but appears when rates rise because the deposit franchise comes to dominate the value of the bank. The liquidity risk of the bank thus increases with interest rates. We provide a formula for the bank's optimal risk management policy. The bank should act as if its deposit rate is more sensitive to market rates than it really is, i.e., as if its "deposit beta" is higher. This leads the bank to shrink the duration of its assets. Shortening duration has a downside, however: it exposes the bank to insolvency if interest rates fall. The bank thus faces a dilemma: it cannot simultaneously hedge its interest rate risk and liquidity risk exposures. The dilemma disappears only if uninsured deposits do not contribute to the deposit franchise (if they have a deposit beta of one). The recent growth of low-beta uninsured checking and savings accounts thus poses stability risks to banks. The risks increase with interest rates and are amplified by other exposures such as credit risk. We show how they can be addressed with an optimal capital requirement that rises with interest rates."

The median crypto hedge fund delivered a 46% loss in 2018. Quantitative crypto funds, which can take short positions, fared better with a median return of 8%.

Price discrepancies between the same assets on different exchanges, which have long been arbitraged away in stock and bond markets but still exist in crypto, also offer traders a way to make money. But achieving those returns has often proved a bumpy ride for hedge fund investors. A 39 per cent drop in the price of bitcoin on March 12 caught many funds by surprise, leading to large losses and some fund closures, particularly among those running high levels of risk.