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India's equity derivatives market has become a major player on the global stage. The equity derivatives market is not just reshaping traditional finance; it is also opening the door to cryptocurrency trading.
As more investors familiar with derivatives begin to explore crypto, the question arises: What does this mean for India’s financial future?
In this article, we’ll break down how derivatives and crypto intersect and what’s next for India’s crypto space.
What Is the Equity Derivatives Market?
The equity derivatives market involves trading contracts like futures and options, which are tied to the future value of stocks. Instead of buying stocks directly, traders use these contracts to speculate on or hedge against price changes, managing risks and potentially profiting from price swings.
For example, if you believe a stock will rise in the future, you can lock in today’s price through a futures contract.
How Crypto and Derivatives Are Linked
Crypto derivatives, like futures and options on Bitcoin or Ethereum, function similarly to stock-based derivatives. Platforms such as Delta Exchange let Indian investors trade crypto derivatives, applying strategies they already know from traditional finance.
Crypto derivatives allow traders to speculate on the price of cryptocurrencies without owning the assets themselves. This provides a way to manage risk, just as traders do in the equity derivatives market. The key difference is that crypto operates in a global, decentralized environment, giving Indian traders access to global markets 24/7.
Crypto's Growing Adoption in India
Retail Investors on the Rise
By 2025, the number of cryptocurrency users is expected to hit 107.30 million, with a 7.41% user penetration rate in 2024. Notably, nearly 35% of investors are between the ages of 18 and 25, indicating that younger generations are driving the adoption of crypto. This demographic is already familiar with tech-driven financial products like derivatives, making the transition to crypto derivatives smooth.
Institutional Investment and Regulation
Institutional interest is also growing in crypto options and futures. Large players are beginning to see the potential in crypto derivatives. The approval of spot Bitcoin ETFs on January 11, 2024 further legitimize crypto as an asset class in India.
However, regulatory clarity remains crucial. In Budget 2022, Section 194S added a 1% TDS on crypto transactions over ₹50,000 or ₹10,000 in a year, based on your filing status. Section 115BBH introduced a 30% tax on income from digital assets, plus a 4% cess.
What’s Next for Crypto in India?
More Blockchain Use in Everyday Businesses
Indian companies, especially in areas like logistics, real estate, and agriculture, will start using blockchain to improve how they track and manage things. Big companies are expected to test blockchain technology to improve transparency in their supply chains. This will make things run more smoothly and be more secure.
Investing in Fractional Real Estate
Tokenized real estate will be big in 2025. This means people can buy small portions of real estate properties through blockchain. Platforms like RealX will allow Indian investors to own small parts of international properties. This will make it easier for everyday people to invest in real estate from different countries.
NFTs and the Metaverse
NFTs (digital collectibles) and virtual worlds will continue to grow in India. Bollywood and the IPL (Indian Premier League) could use NFTs to let fans own special digital content, like clips or artwork. The metaverse, or virtual worlds where people can interact, will also grow, with platforms like Zionverse and Decentraland becoming more popular.
Advantages of Trading Crypto Derivatives
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Smooth Transition: For those already trading in the equity derivatives market, moving into crypto derivatives is straightforward.
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Risk Management: Crypto derivatives provide tools to hedge against volatility, just like stock derivatives.
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Global Access: With crypto, you’re not limited to local markets—Indian traders can participate in global trading 24/7.
Bottomline
India’s equity derivatives market is growing fast and helping more investors explore cryptocurrency trading. As younger investors and institutions get involved, crypto derivatives are becoming more popular due to their similarities with traditional financial tools like futures and options.
FAQs
1. What is the equity derivatives market?
The equity derivatives market allows traders to use contracts based on the future price of stocks, enabling speculation or hedging without buying the stock itself.
2. How does the Indian equity derivatives market connect with crypto?
The success of the Indian equity derivatives market has introduced more traders to futures and options strategies, which are similar to crypto derivatives. This makes it easier for them to transition into crypto trading.
3. What’s next for crypto in India?
The Indian government is expected to introduce new crypto regulations in 2024. With platforms like Delta Exchange offering advanced trading tools, we can expect a rise in both retail and institutional participation.
4. How do I start trading crypto derivatives?
If you’re familiar with trading in the equity derivatives market, platforms like Delta Exchange make it easy to start trading crypto derivatives using similar strategies.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.