Exploring the future of crypto derivatives: Insights from Delta Exchange

Delta Exchange: Tailored for India

Delta Exchange has addressed this gap by developing a solution specifically for the Indian market. India, one of the largest derivatives markets globally, holds significant potential for cryptocurrency derivatives. Delta Exchange offers trading in futures and options on major cryptocurrencies like Bitcoin and Ethereum, providing tools for arbitrage, hedging, and directional trading.

Trading Volume and INR-Settled Products

Delta Exchange has achieved notable trading volumes, with $400 million in notional futures and options traded on a single day. The platform is tailored exclusively for Indian customers, with transactions conducted in Indian rupees. This INR-settlement feature allows traders to participate without needing to purchase or hold cryptocurrencies, simplifying the process and reducing risk.

Ensuring Compliance

The platform adheres to strict regulatory standards, being registered with FIU India and complying with KYC and AML guidelines. This commitment to regulatory compliance ensures a secure and transparent trading environment for users.

Differences from Traditional Markets

Cryptocurrency markets operate 24/7, unlike traditional Indian markets, which have limited trading hours. This round-the-clock trading environment offers approximately 50% more trading days per year, presenting unique opportunities and challenges for traders. The higher momentum in crypto markets, driven by fewer participants and a smaller market size, creates significant trading opportunities, particularly for momentum traders.

Technical Analysis and Market Dynamics

Technical analysis has proven effective in the crypto market, partly due to the relative lack of competition compared to traditional markets. High volatility and liquidity in cryptocurrencies like Bitcoin make them attractive for trading strategies that capitalize on price movements.

Premiums and Trading Opportunities

Cryptocurrency options offer diverse maturities, including daily, weekly, and monthly expiries. This variety provides flexibility for traders to capitalize on different market conditions. The premiums on these options can be significantly lower than those in traditional finance, offering attractive opportunities. For instance, at-the-money straddle premiums for Bitcoin can be around 1.33% of the asset’s value, compared to higher percentages in traditional markets.

Enhanced Risk Management

The 24/7 operation of cryptocurrency markets eliminates overnight gap risks, allowing for more precise stop-loss placements and continuous margining. Delta Exchange’s platform provides comprehensive analytics, helping traders make informed decisions based on open interest patterns, implied volatility, and historical volatility comparisons.

Strategic Trading and Algo Support

Innovative trading strategies, such as using the supertrend indicator to sell at-the-money puts and calls, have shown promising results. These strategies demonstrate the higher reward-to-risk ratio in cryptocurrencies compared to traditional assets. Delta Exchange supports algorithmic trading with robust APIs and comprehensive trade analytics, catering to the needs of advanced traders.

A New Era of Trading

The cryptocurrency asset class is still in its early stages, offering myriad opportunities for those willing to explore its potential. Delta Exchange stands out by providing a secure, INR-settled trading environment with robust analytics and algo trading support. As the market continues to develop, Delta Exchange is well-positioned to lead the way in cryptocurrency derivatives trading in India.

(This article is based on insights shared by Pankaj Balani, Co-Founder of Delta Exchange, during an ETMarkets live stream)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

Source: Forex-Markets-Economic Times