Over the years, the crypto markets and exchanges have undergone several changes to promote the trading of cryptocurrencies. This was further enhanced with the arrival of decentralized finance (DeFi) and blockchain-based crypto trading. The crypto market is full of amazing services, from stablecoins and asset tokenization to crypto loans and much more. Crypto derivatives are one such exciting service that has exploded over the years.
For the uninitiated, crypto derivatives are secondary contracts or financial instruments whose value is derived from a primary underlying asset, usually a cryptocurrency such as Bitcoin. There has been a growing interest in crypto derivatives trading ever since the Chicago Board Options Exchange (CBOE) and Chicago Mercantile Exchange (CME) introduced it on their platforms. Bitcoin futures are the most popular cryptocurrency derivatives, with a remarkable 40–50% increase in average daily volume.
What is Crypto Derivatives Trading?
Derivatives, in general, are agreements between two parties to sell or buy an asset, a commodity, or any other financial instrument at a predetermined price on a predetermined date in the future. In crypto derivatives trading, the two parties will typically agree on a contract that speculates on cryptocurrency prices on a specific date in the future. Regardless of the market price (whether it has fallen or risen) on the date of contract execution, the two parties must agree on the selling and buying prices of the cryptocurrency.
Crypto derivatives trading is typically done on CeFi or DeFi exchanges or on a customer-to-customer basis (C2C). It’s important to distinguish between the rising popularity of crypto derivatives and unrealistic profit expectations. The primary goal of crypto derivatives trading is to limit risks associated with volatile assets, particularly those that exhibit significant and sudden price fluctuations.
For example, if a trader believes that Bitcoin’s price will rise in the future, they can invest in buying Bitcoins, or if they already possess Bitcoins and believe that its price will decrease in the future, they can sell them to avoid losses.
Delta Exchange: Your One-stop Crypto Derivatives Trading Exchange
Derivatives have become an essential element in any market, whether the crypto market, stock market, or forex market. As crypto derivatives trading, along with the general interest in cryptocurrencies, continues to soar to new heights each day, several new players are entering the market now. They’re looking for the best exchange that offers various strategies and services on crypto derivatives trading.
Delta Exchange, a unique crypto exchange specializing in crypto derivatives trading, offers a one-stop solution for these services by providing everything on a single platform. Some of the major services provided on Delta Exchange include:
Robo trading is a type of automated cryptocurrency trading that allows you to invest your funds, sit back, and let the trading bots handle the rest. Momentum strategies, Arbitrage strategy, and AMM (Automated Market Makers) strategy are the three broad categories of Robo Trading strategies offered by Delta Exchange. A DETO staking pool strategy is also available, which lets you earn a risk-free yield on your DETO, the utility token of Delta Exchange.
Under Momentum strategies, we have the Top 20 momentum, DeFi Momentum, BTC Momentum, ALTBTC Momentum, and Top 2 Momentum. The Arbitrage strategy includes the Cash Future Arbitrage, while AMM Strategy includes Large Cap AMM.
In addition to DETO staking pool, DETO Rewards are offered on the following strategies: Large Cap AMM, Cash Future Arbitrage, and Top 20 momentum.
Delta Exchange offers Bitcoin futures as well as futures on more than 70 DeFi coins and altcoins. The crypto futures offered by Delta include all of the benefits of margin trading while also being more cost-effective. Up to 100x leverage, the opportunity to go long, tighter spreads, and deeper order books, as well as reasonable trading fees, are some of the primary features of futures accessible on the Delta exchange.
Options are a type of derivative contract that gives a buyer the right to buy or sell an underlying asset at a predetermined price before or on a predetermined date.
Vanilla options and Turbo options are the two types of options contracts available on the Delta exchange.
Spread contracts are a type of derivative with a spread as the underlying.
The spread can be defined as the price differential between two assets or even derivative contracts. Calendar spread contracts on the Delta exchange are often described as the difference in price between two futures contracts with the same underlying but different maturities.
MOVE options are a direct approach to speculate on the underlying assets’ volatility. The two types of MOVE contracts available on Delta Exchange are daily MOVE contracts and weekly MOVE contracts. While daily MOVE contracts measure the underlying movement over 24 hours, weekly MOVE contracts do so over seven days.
Interest Rate Swaps
Interest Rate Swaps (IRS) are a type of derivative contract in which two parties agree to swap one stream of interest rate payments for another over a predetermined time period.
One of the interest rate streams, known as the ‘floating rate,’ typically changes over time, while the other interest rate stream, known as the “fixed rate,” remains constant. As a result, a typical IRS comprises the replacement of floating-rate payments with fixed-rate payments.
Indeed, the increasing popularity of crypto derivatives trading has made several beginners flock to the market with no previous knowledge or experience in derivatives trading or cryptocurrency at all. When entering a new market for the first time, it is imperative to research the market and study various trading strategies. Choosing a suitable exchange is just as crucial. With Delta Exchange, users can trade in complete confidence, thanks to its advanced features and services, as well as increased security.