Crypto Futures Compare

Additional Useful Information

• Suitable for speculators and hedgers. Speculators are market participants that have a market view about the underlying asset and want exposure to it without holding the coin. Hedgers wish to mitigate the risk of price fluctuations in the underlying cryptocurrency by locking in a price for future delivery.

• Perpetual futures contracts, exclusive to the crypto market, operate similarly to traditional futures but without an expiry date. Traders can maintain these contracts indefinitely until they choose to close their position voluntarily or face liquidation due to margin constraints.

• Commonly traded cryptocurrencies in futures markets include Bitcoin, Ethereum, and other major altcoins.

Returns *

• Futures trading is a zero-sum game. This means that whenever a participant makes a profit, there will be an opposite participant who will make the exact same loss. This would mean that futures returns vary from individual to individual and it depends heavily on the skill of the market participants to speculate the future trend of the underlying asset.
• There are potentially 2 components of returns in futures -
• Price Return - A change in the spot price (current price) from the previous spot price is called the price return. This is like capital gains.
• Roll Return – Investors roll ahead futures contracts when they want a longer-term exposure to the underlying asset as compared to a shorter-term exposure. The roll return is achieved by merging the futures price with a higher spot price.

Risk Level

• Crypto Futures trading is generally high risk.

• The main risk is the price risk, that is, price of underlying crypto changing unfavourably due to market conditions.

• Crypto Futures trading involves a lot of leverage. This can magnify losses or gains which makes futures high risk investments.

• It is always worth doing thorough due diligence on an individual level on every futures contract under consideration.

Liquidity

• Futures trading/investing is very liquid. 

• This is because futures are derivatives which have an expiry date. This means that no investors will be forced to hold on to the investment for an indefinite period. Investors can either sell the futures contract or wait till the expiry date.  

Interesting Facts

• Since Crypto futures contracts are highly leveraged, less upfront capital is required to purchase them.

• Crypto markets are worldwide. Transactions can occur with any potential investor around the world. For this reason, cryptocurrencies trade 24/7.

• The use of blockchain secures almost all cryptocurrencies. All transactions are kept a tab on and verified by this technology. This means that there is no scope for alteration of records of the transactions and the chances of fraud drop.

• Cryptocurrency is a good way to diversify an investment portfolio. This is because the correlation of cryptocurrencies with traditional investments is not perfect. This means they do not always move in similar directions.

• Not only for paying for goods and services, but cryptocurrency can also be used for donations, tipping, gifting, etc. Cryptocurrencies have a wide range of uses.

Tax Implications

• Profits from cryptocurrencies are taxed at a flat rate of 30% in India.

• There is a 4% cess added as well to the 30% tax.

• Short term capital gains and long-term capital gains are taxed similarly. There is no tax differentiation based on the gains.

• Long term capital losses can be offset with long term capital gains. This avoids any tax on the gains.

• Section 194S levies 1% Tax Deducted at Source (TDS) on the transfer of crypto assets from July 01, 2022, if the transactions exceed ₹50,000 (or even ₹10,000 in some cases) in the same financial year. 

Where To Invest

• https://india.delta.exchange/?utm_source=Delta_Global&utm_medium=home