Definition ∞ Hedging demand represents the collective need among market participants to mitigate potential losses from price fluctuations in their cryptocurrency holdings. This demand typically increases during periods of market uncertainty or expected volatility. Investors often use derivatives contracts, such as futures or options, to establish positions that offset the risk of adverse price movements in their spot assets.
Context ∞ News reports often discuss hedging demand as a gauge of market sentiment and risk aversion. A rise in hedging demand can signal a cautious outlook among institutional and retail investors, potentially indicating anticipated price corrections or a desire to protect gains in an unstable market environment.
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