They share insights on market-making, arbitrage opportunities, and the road ahead for institutional crypto adoption in India and beyond.
With years of experience in fintech and crypto, Avinash and Sudhakar discuss the challenges and opportunities in institutional crypto trading, from market-making and arbitrage strategies to regulatory landscapes and risk management.
They also share insights on how Pi42 is addressing liquidity concerns and bringing global institutional-grade infrastructure to Indian crypto markets.
Edited Excerpts –
Kshitij Anand: Before we dig deeper, let us know what key terms in crypto trading every beginner trader should know at the start.
Avinash Shekhar: Actually, there are certain terms that come from the stock market, which we have adopted for crypto, and there are certain terms specific to crypto. I will try to cover both. One thing to understand is that crypto volatility is significantly higher than that of the traditional stock market. In stocks, you typically see 1% to 2% daily fluctuations, whereas, in crypto, it can be 5% or more on a daily basis. This makes risk management even more important in crypto.
For example, your risk-to-reward ratio, position sizing, and how much capital you allocate to a trade are crucial factors. We generally suggest that for a particular trade, you should allocate less than 1% of your total capital designated for crypto trading—avoid betting too much on a single trade.
Now, regarding trade-specific terms:
- Break-even price: This is the price at which there is no profit or loss. However, this is not necessarily the price at which you bought the asset—you must also factor in fees and other charges.
- Mark price: This is similar to the market price, but there can be a difference, especially when volatility is high. Sometimes, the price of a derivative and the spot price can differ significantly across exchanges. Recently, I have seen differences of up to 10%, which is very rare but important to be aware of. Your liquidation happens based on the mark price, not the current price.
- Liquidation price: This is the price at which your position will be liquidated. If you have taken 10x leverage, meaning for a $100 trade, you have put in $10 as margin, your position will likely be liquidated at around a 9% price drop (after adding charges and safety margins). Liquidation happens at the market price, meaning the sell order may get executed at a significantly lower price if the market is declining rapidly during high volatility.
- Funding fees: In stock market derivatives, there is an expiry date (monthly or weekly), which accounts for the interest cost. However, in crypto, we have perpetual futures, where a position can be maintained indefinitely. To keep such positions open, there is a funding fee, similar to interest. Unlike traditional markets, the exchange does not earn from this fee; instead, it is paid between traders—long positions pay short positions when long demand is higher, and vice versa.
These are some key terms that crypto traders, especially those trading derivatives, should understand.
Kshitij Anand: Yes, many of these terms are similar to those used in the F&O segment of equity markets, though some require slight modifications, which you have explained well. If someone wants to check the current price of Bitcoin, how can they do so?
Avinash Shekhar: The current price of Bitcoin is available on multiple platforms, including centralized exchanges like Pi42 and other major exchanges. Additionally, there are tools that stream real-time prices from various exchanges. Our website also continuously publishes Bitcoin prices.
Kshitij Anand: One topic generating a lot of discussion is Bitcoin’s recent volatility. We have seen more than a 20% drop from its recent all-time high. Is this a typical event, or is it unique to this bull cycle? In equity markets, a 20% drop typically signals entry into bear market territory. What are your views?
Avinash Shekhar: As I mentioned earlier, crypto is inherently more volatile, and such price movements are quite normal. In the last bull cycle, we saw similar trends. If you look at the past six to eight months, Bitcoin’s price has surged from around $40,000–$45,000 to over $100,000—more than doubling. A 20% correction in crypto is reasonable and not something to be overly concerned about.
Various factors influence price movements, but historically, such corrections have occurred multiple times in past bull runs.
Kshitij Anand: So, no need to pack your bags?
Avinash Shekhar: Yes, no need to pack your bags.
Kshitij Anand: Let me also get your viewpoint on the factors that determine Bitcoin and Ethereum price actions.
Avinash Shekhar: There are two or three factors. One is obviously short-term demand and supply. When people ride it from $40,000 to $110,000, profit booking happens, so that is one short-term factor. The second factor is more about what is happening globally because crypto is increasingly going mainstream. Global economic events also impact prices. For example, when Trump came in, it gave a boost to Bitcoin prices because he is pro-crypto. Then, there are factors like the U.S. government threatening tariffs on Canada, the UK, and Mexico, which can disrupt global commerce, indirectly impacting crypto.
What has also changed is that earlier, institutional participation in crypto was not very large. This time, institutional participation has increased significantly. When institutions sell, it also impacts prices. For example, Bitcoin ETFs saw an inflow of $36 billion last year. However, in the last few weeks or months, we have seen outflows, which also affect the price. But from a long-term perspective, the story remains strong, with increasing crypto adoption and continued high volatility.
Kshitij Anand: We were just discussing recent trends in the crypto market, the key terms every beginner should know before trading in the crypto derivatives market, and the recent 20% drop from the highs. Now, let me get your viewpoint—if someone who has started trading has some knowledge of equity markets and basic technical terms like support and resistance levels, are support and resistance levels different for Bitcoin or Ethereum in the current market scenario? How should they approach this?
Sudhakar Pradhan: As I said, it is quite similar to the equity market in terms of how technical indicators work. However, since crypto is a relatively new market, these technical indicators tend to work even better than in the equity market. If you look at Pi42, I have added a simple indicator called the 200-day moving average.
Kshitij Anand: So, it has taken support around the long-term moving average?
Sudhakar Pradhan: Yes.
Kshitij Anand: Approximately, yes.
Sudhakar Pradhan: Right. Recently, BTC dropped below the 200-day moving average, which is around this level. Now, it is trading close to $79,000. The next support level is around $73,000–$74,000. If it moves upward, this will be the main resistance level for now. If BTC really wants to move up, it should cross the 200-day moving average, and then we might see some bigger action. But yes, currently, it is in a downtrend.
If you observe how support and resistance levels work, for many days—about three or four months—it acted as a support level. However, when BTC dropped below this support level, it quickly fell into this zone. So yes, support and resistance levels work quite effectively in crypto trading.
Kshitij Anand: Let me also get your view on how volume influences price action movements in Bitcoin and Ethereum.
Sudhakar Pradhan: So, if you see, I have also added one indicator called volume here. You can access hundreds of indicators on our platform very quickly. If you look here, you’ll notice a larger volume compared to the previous ones, and the green candle corresponds to green volume. Then you can see how…
Kshitij Anand: So, it basically confirms the price action. That means when volumes are higher—this is what we have learned—price action accompanied by a rise in volume justifies or validates the move, making it a sustained move in the market.
Sudhakar Pradhan: It basically tells us how strong a move really is. If there is higher volume, then of course, it confirms that the trend is actually happening. Otherwise, it could be a fake trend that might reverse and go down…
Kshitij Anand: Right.
Avinash Shekhar: So basically, as Sudhakar said, if you look at the bottom line, whatever works in stock markets tends to work significantly better in crypto because it’s still a new market. The inefficiencies that have already been captured in the stock market haven’t yet been fully addressed in crypto. So yes, technical indicators work better here.
Kshitij Anand: Good that you brought up candlestick patterns. Sudhakar, let me quickly ask you—are there any specific candlestick patterns that are most reliable for predicting trend reversals in Bitcoin or Ethereum?
Sudhakar Pradhan: Apart from volume, candlestick patterns indicate trends, market sentiment, and the current movement in the market. For beginners, there are a few common candlestick patterns. One of the most well-known is the hammer or the inverse hammer. If you see an inverse hammer and the volume is high, supporting the pattern, it can signal a trend reversal.
Another popular pattern among beginners is the engulfing pattern. For example, if there is a small red candle followed by a larger green candle that completely engulfs the previous one—though I can’t find an exact example here—if volume supports it, there is a high chance that the price will go up.
The third important pattern is the doji candle, which looks like a cross and indicates indecision in the market. For example, if you see such a pattern, you should wait for one or two more candles to confirm the trend direction.
Kshitij Anand: For confirmation, right?
Sudhakar Pradhan: Yes.
Avinash Shekhar: One more point to add on the technical side—you must be familiar with scalping in the traditional stock market. Scalping is a low-risk strategy where traders enter and exit trades very quickly, minimizing risk.
Since technical indicators work very well in crypto for short-term trading, combining them with scalping can be highly effective. In fact, at Pi42, we’ve implemented a feature where, if you engage in scalping—meaning you open and close a position within 15 minutes—you don’t have to pay a closing fee.
We introduced this because, in short-term trading, fees can eat into small profits. So, if you’re trading frequently and making small gains, we waive the closing fees to support this kind of trading.
Kshitij Anand: Let me also get your viewpoint. How do psychological price levels that we have seen in the past, such as one lakh dollars for Bitcoin, impact price action? Recently, we have slipped below the 80,000 mark, and there were big headlines about the same as well.
Avinash Shekhar: Psychological levels do impact Bitcoin prices. For example, 100K was a psychological benchmark, and people were waiting for Bitcoin to reach that level. Investors who bought at $30,000, $40,000, $50,000, and $60,000 saw $100K as their profit-booking target. Initially, $100K became a resistance level because everyone was trying to book profits at that price. Eventually, that level was broken, and Bitcoin reached around $110K. After that, $100K acted as a strong support level for a long time. However, in the last few months, we have frequently seen Bitcoin breaking below and above $100K, making it less of a psychological level. Now, new psychological levels, such as $125K or $150K, are emerging, where significant price action is likely to occur. So yes, psychological levels play a role in crypto markets as well.
Kshitij Anand: How should one manage risk given the volatile nature of the crypto markets? What are the different options available for crypto traders at this point?
Avinash Shekhar: As you rightly pointed out, the crypto market is significantly more volatile compared to other markets, especially the stock market. Whenever making trading decisions, one must keep this in mind. It is important to bifurcate trades into short-term and long-term strategies.
For example, if you are scalping, meaning you enter and exit trades within 15 minutes, the risk of a big loss is smaller. In such cases, you can take higher leverage—maybe 50x or 75x—because you know you’ll exit the trade quickly.
However, if you have a longer-term outlook—let’s say Bitcoin is at $80,000 and you want to hold it until it reaches $150K, which could take three to six months or longer—you cannot use 75x leverage. Instead, you should use lower leverage, such as 3x, 4x, or 5x. This way, even if the price drops by 20–30%, your position won’t be liquidated.
Additionally, capital allocation is crucial. If you are taking high leverage (e.g., 75x) for a short-term trade, your capital allocation should be very small. Conversely, if you are taking a long-term position with lower leverage, you can allocate slightly more capital. Effective risk management is essential when trading crypto.
Kshitij Anand: Let me also get your view on the implications of any breakout or breakdown patterns observed recently in Bitcoin and Ethereum charts.
Sudhakar Pradhan: As I mentioned earlier, this was a very crucial level. When Bitcoin dipped below it, it quickly declined further.
Similarly, if we look at Ethereum, it is already below the 200-day moving average (DMA). However, the current support level is around $2100, and it hasn’t fallen below that. This suggests that $2100 is acting as a strong support level.
Ethereum has underperformed this season compared to Bitcoin and other assets. If Ethereum breaks above the 200-DMA and crosses the next resistance level at around $3000, it could see further upward movement.
In the past month, several macroeconomic events, including US tariffs and other external factors, have influenced the market. As Avinash mentioned, these developments continue to impact key levels in crypto markets.
Kshitij Anand: Some bit of volatility, yes.
Sudhakar Pradhan: Yes. So, not just Ethereum and Bitcoin—if you go to Pi42, you can access more than 250 pairs. Whether someone is a beginner or a pro trader looking to enter the market, they can find more than 200 pairs on our platform, not just Bitcoin and Ethereum.
Kshitij Anand: Let me get your viewpoint on how to evaluate cryptocurrency brokers and exchanges. What are the key things one should keep in mind?
Avinash Shekhar: If we break it down into two or three parts, the first aspect is compliance—whether the exchange is adhering to Indian regulations. For example, are they registered with the FIU? What kind of KYC policies do they have? Do they follow stringent KYC protocols? These factors indicate how serious an exchange is about compliance, which is crucial since crypto is still a space where many people have concerns.
The second factor is deposits and withdrawals—how smooth is the process? Especially right now, crypto withdrawals are an issue across the industry. For example, in our case, we don’t even have that concept because we don’t hold customer crypto. Users can deposit and withdraw in INR, making the process much smoother. Most of our deposits are credited in real time, within a few seconds. Similarly, more than 97-98% of withdrawals are processed within minutes.
The third factor is the overall user experience—how seamless is the UI/UX, the trade execution, and customer service? These elements play a crucial role in the overall experience.
The fourth factor, particularly relevant in crypto, is security. Again, since we don’t hold customer crypto, this doesn’t apply to us, but for traditional crypto exchanges, security is a major concern. How transparent is the exchange? If it holds $100 million in customer assets, is that amount actually there, or is there any risk of mismanagement? Transparency and security measures are key.
Another important aspect is whether the exchange is based in India or overseas. If you are an Indian customer, dealing with an Indian exchange adds an extra layer of familiarity and security. Indian exchanges operate within the local regulatory framework, their founders are based in India, and Indian regulators have greater oversight compared to international exchanges.
Kshitij Anand: There is also more familiarity with the exchange.
Avinash Shekhar: Yes, exactly. There is greater familiarity, the founders are in India, and the regulators have more control over these exchanges compared to international ones.
