Mutual Insurance: Secure Your Contracts

Bitcoin is known for being a volatile asset. Wild price swings are often the order of the day due to for instance, events like the Bitcoin halving or general market speculation.

This can be a problem for traders. What if the price moves against your position? In a worst-case scenario, that could mean liquidation. However, that’s where our new Mutual Insurance function can help.  

Offering a solution

We are pleased to announce a new feature — Mutual Insurance, a risk management tool where traders can hedge their positions against unfavorable market movements. In the event that a user experiences loss on their insured position (within the effective period of the insurance), the user will as a result receive a payoff from the mutual insurance fund.

We offer protection to both long and short positions. In other words, your contracts can be secured no matter what happens.

A trader with a long BTCUSD position can purchase long protection to hedge against potential downside risk.

A trader with a short BTCUSD position can purchase short protection to hedge against potential upside risk.

What are the main features of Mutual Insurance?

Traders can take out insurance for time periods of 2 hours, 12 hours, or 48 hours. Traders can also decide to take out full insurance for 100% of their position, or in addition partial insurance for 75%, 50%, or 25% of their positions.

To get protected, traders need to pay an insurance premium. All the insurance premium will be credited to a Mutual Insurance Fund, and all the Mutual Insurance payoffs come from the Mutual Insurance Fund. That’s why it’s called ‘Mutual Insurance’.

Bybit will inject 200 BTC as initial capital to launch the Mutual Insurance Fund, as its initial balance.

Trade without the risk

In conclusion, Bybit’s Mutual Insurance is a great risk management tool to use if there is high volatility or when the market trend is unclear. Above all, you can be rest assured that if the market moves against your position, you will be compensated.

Start using the Mutual Insurance feature now: https://www.bybit.com/app/exchange/BTCUSD

For more information on how to use Mutual Insurance,  visit:  https://help.bybit.com/hc/en-us/articles/900000389743-Introduction-to-Mutual-Insurance