If you don't want to lose money, you can choose Delta Neutral.
I'm a japanese trader, and i just translated my original article using Google translate, Sorry for my inconvinient English
- What is a Delta Neutral Strategy for Cryptocurrencies?
- Benefits of the Delta Neutral Strategy for Cryptocurrencies
- Disadvantages of Delta-Neutral Strategy for Cryptocurrencies
- [Current situation] FR (financing rate) is 0.01% to 0.03%
- the most profitable combination of exchanges and currencies
- Most efficient exchanges: Bitmex
- Recommended Exchange for Delta Neutral is 【BYBIT】
- Maximum Efficiency Currency: [XRP]
- Recommended currency for Delta Neutral 【 XRP 】
- DELTA NEUTRAL STRATEGY POINTS
- [Please check] Funding ratio in October (monthly interest rate over 3.1%)
What is a Delta Neutral Strategy for Cryptocurrencies?
*This article discusses a less challenging "inverse" delta neutral strategy. The Delta Neutral also has a slightly more labor-intensive USDT type, which is not included in this article. If you're a beginner or don't have much time to spare, I recommend the inverse Delta Neutral.
In overseas cryptocurrency exchanges, depending on the position, there is a system to pay (or receive) something like a fee called a funding rate. This is a method to steal only the commission without depending on the price movement of the currency.
The process is simple: buy a cryptocurrency on a local exchange and send it to a foreign exchange.
->to hold a short position as a derivative asset with a leverage(×1) equal to the amount of that currency
Funding occurs every eight hours and varies in size depending on the trader's position on each exchange. The base is 0.01%.
More detailed techniques and methods will depend on the access to this article, but there are other sites that provide detailed explanations. This article summarizes Delta-neutral performance to date, current status, and a few quick notes.
Benefits of the Delta Neutral Strategy for Cryptocurrencies
・An annual interest rate of around 10% can be targeted regardless of trading skill.
・The maximum loss can be calculated (adjustable).
・have little psychological burden
・There are times when the monthly interest rate is around 3% depending on the timing.
・For the past three years, the average annual interest rate is about 30% (BYBIT: currency is XRP).
Disadvantages of Delta-Neutral Strategy for Cryptocurrencies
・There is a possibility of GOX when transferring money from domestic to overseas.
・Completely ignoring cryptocurrency potential (As long as bitcoin is delta-neutral, it's not going to explode, even if bitcoin is 10 times bigger.)
・Anxiety about overseas exchanges (this depends on people)
GOX (Loss of currency by misaddressing when sending money, loss of assets due to exchange failure or unauthorized access) at the top is probably the biggest risk.
There are many ways to prevent this, so please be careful.
[Current situation] FR (financing rate) is 0.01% to 0.03%
BYBIT ’ s funding rate was higher in some currencies.
I'ts a little superior now.
At an annual rate of 10% to 30%.
the most profitable combination of exchanges and currencies
This combination looks expensive.
Most efficient exchanges: Bitmex
Bitmex is currently raising the most funds.
Recommended Exchange for Delta Neutral is 【BYBIT】
When it comes to the financing rate that is suitable for the delta-neutral strategy, it may be that other exchanges are more efficient, but I am using BYBIT.
There are many reasons, but I think it's easy to use.
Maximum Efficiency Currency: [XRP]
XRP has the highest funding rates on various exchanges.
You need to check it.
Recommended currency for Delta Neutral 【 XRP 】
The past funding rates at each XRP exchange are listed.
BYBIT Funding Rate
Ripple's Funding Rate
(Comparison of Bitcoin Rates - Bybt)
As you can see from the list, each exchange maintains a fairly high level.
The maximum instantaneous wind speed of BTC and ETH can be high, but it is becoming less likely to remain high.
If you want to go completely Dell neutral, XRP is recommended.
DELTA NEUTRAL STRATEGY POINTS
You need to pay attention when you transfer money, withdraw money, and file a tax return.
Since cryptocurrencies are handled on overseas exchanges, it is essential to transfer money between Japanese exchanges and overseas exchanges. You need to be careful not to mistake the address.
Also, even after you succeed in withdrawing money, tax is not withheld, so it is important to file a tax return and pay taxes.
[Please check] Funding ratio in October (monthly interest rate over 3.1%)
Read more about October 2021 funding and Delta Neutral's performance below.