Hello,
I am arbitraging cryptocurrencies for a living for the last 5 years. Arbitrage in my case is only possible if I hold the coin in two different exchange at the same time. Hence I have to hold the coins I am arbitraging in the exchanges in case any arbitrage opportunity occurs. This sometimes leads a loss for me even if I profit from arbitrage as price of the coin drops. Therefore, my intent is to hedge my position. For example, buy $1000 worth of LTC in spot and sold $1000 worth of LTC perpetual contract, which is industry standard.
I see below lines in the Fatwa section regarding futures:
“If you cannot find any halal alternative to a conventional futures instrument and your business is really struggling without using futures (and the use of futures is standard practice in your industry) we would probably get comfortable with using conventional futures. But it would depend on the particular circumstances.”
I cannot find halal alternative for hedging for cryptos (If you know, please refer). The use of futures is standard in the industry (the most of the volume comes from futures and almost every arbitrator avoids the risk by hedging with perpetual futures). Since my business is to find arbitrage opportunities, I have nothing to do with fluctuation of coin prices. However, I expose to prices if I am not hedged. For the future of my business, I need to disconnect from fluctuation of the prices by hedging. Otherwise, my business will not sustain. In the light of this requirement, can I use crypto perpetual futures contracts?
Thanks.