How to hedge your crypto holdings with a perp short
Protect coins you hold from a fall without selling them, by opening a short on a perp DEX or exchange: how to size it, what it costs in funding, and what can go wrong.
Updated Nov 8, 2026
In short
If you hold a coin you don't want to sell, a short perpetual future of the same size balances it: when the price falls, the short gains about what your coins lose. Size the short to what you hold, keep plenty of margin so it isn't liquidated in a rally, and watch the funding rate, which you pay or receive while it's open. It's a way to stand still for a while, not to make money.
Say you hold 10 ETH you don't want to sell, but you're worried about the next few weeks. A hedge lets you keep the coins and stop caring, for a while, which way the price goes.
How a hedge works
A short perpetual future gains when the price falls and loses when it rises. Open a short for 10 ETH, and a 20% fall costs your coins 2 ETH's worth of value while the short makes about the same. Your total barely moves either way.
Step 1: work out what you're exposed to
Add up how much of the coin you hold everywhere: wallets, exchanges, staked or lent, plus any long or short perps you already have. In Burokku, the Perps tool shows this per coin as your book: what you hold, what your perps add up to, and what's exposed to the price.
Step 2: size the short
A full hedge is a short the same size as what you hold. A half hedge is half. In the Perps tool, Hedge your ETH works out a short that matches what you hold and shows it for you to review before anything is sent. You can also ask Burokku AI: "How would I hedge my ETH exposure with a short?"
Step 3: choose where, and keep the margin high
Open the short on a perp DEX such as Hyperliquid, Lighter or Aster, or on an exchange, wherever you have margin. Use low leverage: the hedge only needs to match your coins, not to be efficient. A short at 2x leverage can take a 40% rally before it's in danger; at 10x, a little under 10%. If the short is liquidated, your coins are suddenly unhedged at the worst time.
Step 4: watch the costs
While the short is open you pay or receive funding. When many people are long, shorts are paid; when the market leans short, they pay. Over weeks, funding can add up to more than the fees. Check it before you open, and now and then while it's open.
Step 5: watch the hedge itself
Set a perp liquidation alert so you hear if a rally pushes the short close to its liquidation price, and add margin if it does. Close the short when you no longer want the protection; your coins stay where they were the whole time.
Questions
- Why not just sell?
- Selling may be a taxable event, can mean leaving a staking or lending position, and you may want the coins back later. A short leaves your coins where they are. It has costs of its own: funding, fees and the margin it ties up.
- What happens if the price goes up instead?
- Your coins gain and the short loses about the same, so your total stays roughly flat. The risk is the short being liquidated if the price rises a long way and its margin runs out, which leaves your coins unhedged. Keep enough margin, and use low leverage.
- Is this financial advice?
- No. This explains how a hedge works. Whether to hedge, and how much, depends on your situation.