The Cryptocurrency Trading Journal

Specterx said:
From ZH:

...earlier today MSTR CEO Michael Saylor confirmed that the transaction had been consummated with the company buying 13,005 bitcoin at an average price of $37,617 for a total of $489 million.

The transaction has cemented MSTR's status as the largest corporate hodler of bitcoin, with a total of 105,085 bitcoin acquired for $2.741 billion or an average price of $26,080...

MSTR is already down $60 million on this position as of now, another $6k fall in BTC and they're in the red since inception. The presence of large numbers of underwater margined longs is probably the single most bearish factor that can exist in any market.

IMO BTC, and by extension the crypto universe, is in a very dangerous position at the moment - combining extremely negative price action with lingering bullishness and lots of trapped whales below that 45-48k level. A number of coiners on ET added to their positions a few weeks ago, and here we are challenging the recent lows again. If we drop into the 20s then the Tether blowup scenario is also suddenly in play. And then, e.g. how willing is Elon Musk to let plunging crypto prices trash his quarterly numbers for TSLA?
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MSRT avg is $26K so they are still up (For all their 100K BTC stash, not just for the 13K recently bought), but more importantly their debt maturies goes out several years so there is no margin call risk and the guy running the company is well deep in the BTC religion, so he is not going to sell

What determines a trader profit and loss are at what price he buys and what price he sells (or vice-versa), you seem to enjoy coming out with bearish statements everytime BTC is down a bunch, but as a trading strategy, that is clear suicide. All the previous times where met with a squeeze, so any short at those levels would have hit a stop loss over and over. And if no stop loss was present, then there would be unlimited risk which historically would have meant an account wipeout. And if there was a wide stop, then the win rate must have been really high to compensate for it which I have a hard time seeing it to be the case given the squeezes plus the fact that BTC is really volatile and has a tendency to hit stops.

So I ask, what is the valued added of all of this talk? I mean, it cant possibly produce a net positive P&L given the factors mentioned. A actual trading strategy that would add value would be saying 'Im bearish BTC so I'm shorting the top end of the 30K-42K range starting to add at 38 all the way to 42, with a stop a 45K, the goal is a 40K avg with 5K risk and potential gain of $10K or 20K if it goes to $20K.
Talking about bearish things at prices where it makes no sense to short isnt a strategy, not it adds value. So these are just words to me. I got in at $9K with adds at $17-19K, it makes no sense for me to sell here so I continue to hold. Once I see a combination of a thesis + a price that makes sense to be a seller, than I will sell some. At $32.7K it makes little to no sense to me for anyone to be a seller, whether they are a long or a short so this thesis to me are just words
 
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Daal said:
MSRT avg is $26K so they are still up (For all their 100K BTC stash, not just for the 13K recently bought), but more importantly their debt maturies goes out several years so there is no margin call risk and the guy running the company is well deep in the BTC religion, so he is not going to sell

What determines a trader profit and loss are at what price he buys and what price he sells (or vice-versa), you seem to enjoy coming out with bearish statements everytime BTC is down a bunch, but as a trading strategy, that is clear suicide. All the previous times where met with a squeeze, so any short at those levels would have hit a stop loss over and over. And if no stop loss was present, then there would be unlimited risk which historically would have meant an account wipeout. And if there was a wide stop, then the win rate must have been really high to compensate for it which I have a hard time seeing it to be the case given the squeezes plus the fact that BTC is really volatile and has a tendency to hit stops.

So I ask, what is the valued added of all of this talk? I mean, it cant possibly produce a net positive P&L given the factors mentioned. A actual trading strategy that would add value would be saying 'Im bearish BTC so I'm shorting the top end of the 30K-42K range starting to add at 38 all the way to 42, with a stop a 45K, the goal is a 40K avg with 5K risk and potential gain of $10K or 20K if it goes to $20K.
Talking about bearish things at prices where it makes no sense to short isnt a strategy, not it adds value. So these are just words to me. I got in at $9K with adds at $17-19K, it makes no sense for me to sell here so I continue to hold. Once I see a combination of a thesis + a price that makes sense to be a seller, than I will sell some. At $32.7K it makes little to no sense to me for anyone to be a seller, whether they are a long or a short so this thesis to me are just words
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Well, this is a "cryptocurrency trading journal" and I posted about factors which are highly relevant to short and medium term action in the crypto market. Whether a trader is currently long, short or flat, and from what price, should be irrelevant to his/her trading decisions - if you're long then you're long from the last tick, whether you bought at $9, $9,000 or $59k. I had a home run in long GBTC last year despite leaving a great deal on the table, so I am certainly willing to take advantage of swing trading opportunities in both directions even though I think cryptos are stupid. IMO it's extremely foolish to trade any market while covering your ears to information which might go against your position.

As for my current position, I said back on May 21 that I was flat but might be interested in shorting (via CME futs) 6-8 weeks in the future. We're coming up on that window now. For various reasons, including those you've mentioned re: squeezes and negative convexity of shorting, I will be very conservative if I take a position at all. The trade will have to be undersized due to the risk of massive over-weekend gaps, and if the market doesn't act the way I want then there's no trade for me. If I do short, the target would be 14.5k.
 
Specterx said:
Well, this is a "cryptocurrency trading journal" and I posted about factors which are highly relevant to short and medium term action in the crypto market. Whether a trader is currently long, short or flat, and from what price, should be irrelevant to his/her trading decisions - if you're long then you're long from the last tick, whether you bought at $9, $9,000 or $59k. I had a home run in long GBTC last year despite leaving a great deal on the table, so I am certainly willing to take advantage of swing trading opportunities in both directions even though I think cryptos are stupid. IMO it's extremely foolish to trade any market while covering your ears to information which might go against your position.

As for my current position, I said back on May 21 that I was flat but might be interested in shorting (via CME futs) 6-8 weeks in the future. We're coming up on that window now. For various reasons, including those you've mentioned re: squeezes and negative convexity of shorting, I will be very conservative if I take a position at all. The trade will have to be undersized due to the risk of massive over-weekend gaps, and if the market doesn't act the way I want then there's no trade for me. If I do short, the target would be 14.5k.
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To me, paying attention to bearish information now, its like paying attention to gloom and doom in US stocks back in Mar 2020. The time to sell was long gone and the other side of the trade was the interesting one. If shorting has negative expected value now, and I believe it has due the large support at 30K and the risk of a squeeze to 40K then it makes no sense to be a seller of a long position either. And if the price does break 30k, I dont think shorting makes it sense either. I mean, i doubt anyone ever made tons of profits (adjusted by the whipsaws and stop loss hits) shorting BTC after its down 55-60%, especially because it could be a fake breakdown (a big risk in a 70% vol asset)

I probably should have rebalanced some at over 50K, but I'm playing for the big adoption cycle of institutions. Bridgewater says now that 10% of BTC is owned by institutions, that is still pretty small. Stephen Cohen said last week he is getting into crypto, that is in June of 2021. The institutional adoption is still early, I believe there is a much larger cycle that will play out so that's what I'm playing for. Its easy to be distracted by trades here and there but they lead to slippage, ruinning a great avg entry price, taxes, fees, etc

I fail to see any news that has falsifised the thesis of the institutional adoption cycle of crypto, and as they adopt it, some will become BTC converts. I doubt many institutions will run a crypto porfolio with 0% on BTC. So selling makes no sense to me, which leads one to believe that buying or holding longs is actually the correct side to be on
 
Specterx said:
Well, this is a "cryptocurrency trading journal" and I posted about factors which are highly relevant to short and medium term action in the crypto market. Whether a trader is currently long, short or flat, and from what price, should be irrelevant to his/her trading decisions - if you're long then you're long from the last tick, whether you bought at $9, $9,000 or $59k. I had a home run in long GBTC last year despite leaving a great deal on the table, so I am certainly willing to take advantage of swing trading opportunities in both directions even though I think cryptos are stupid. IMO it's extremely foolish to trade any market while covering your ears to information which might go against your position.

As for my current position, I said back on May 21 that I was flat but might be interested in shorting (via CME futs) 6-8 weeks in the future. We're coming up on that window now. For various reasons, including those you've mentioned re: squeezes and negative convexity of shorting, I will be very conservative if I take a position at all. The trade will have to be undersized due to the risk of massive over-weekend gaps, and if the market doesn't act the way I want then there's no trade for me. If I do short, the target would be 14.5k.
More...
I guess the difference between our approaches is that I assume max uncertainty of anything crypto related (at least for major cryptos that already have network effects). So when you list bearish points, I think 'ok, that has a 50% chance of being right'. That leaves a 50% chance of being wrong and that means, exponential profits if the bearish view dont play out, limited losses if they do

So in my approach, I dont have to have to actually know anything, I just assume max uncertainty and I'm long the "call options" that benefit from that uncertainty. In your approach, you have to be right always. Or you got to have the perfect reentry points to rebuy things if the bear ideas dont play out. selling to buyback lower or buyback if it goes up over a certain area, to me is a strategy heavely exposed to whipsaws (also, its tax and fee intensive, not to mention the operational risk of a 24/7 market) but presumably, some talented traders can pull it off. I rather make it easier on myself and control my risk through my position sizing. Its what I call 'idiot proofing' my trading/investing. Most crypto skeptics assume they are right 100% of the time, I dont
 
If someone thinks there is a 90% chance of an event happening and 10% of another but their margin of error on those probabilities is huge, then that person actually has a 50/50 type of situation on their hands (in a monte carlo simulation, I bet the result will come close to a 50-50). To me, crypto and BTC is a 50/50 type situation because:

-The market itself is saying that through the massive 70-100% volatility (if the market doesnt know next weeks price of BTC, why would Roubini or Saylor know?)
-Its hard to predict technology
-Both bulls and bears have good points
-If you are not sure of something, assuming max uncertainty is likely to outperform being a complete believer in any of the 2 camps

So assuming its 50/50 is more robust and minimizes regret
 

Interesting comment by money historian Niall Ferguson

"One of the lessons I had in recent experiences is to listen to your teenage children because its probable that they at 15 understand better than you at 50 what is going on in this new and rapidly evolving world. So I kind of learnt me lesson and it was partly that experience that led me to dive into really reading up about Bitcoin and also trying to understand how it works"
 
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A key part of the Taleb anti-BTC thesis seems to be high volatility at higher market caps. But I think that is a key flaw on his argument. In my career as a day and swing trader I have noticed that retail driven stocks are much more volatile and inneficient than institutional driven stocks (think GME vs AMZN). BTC is still a primarely retail driven market (Bridgewater estimates that only 10% of BTC is owned by institutions), that retail has access to huge unregulated leverage out of asia. As institutions become a bigger percentage of the total stock and daily liquidity, I bet (I'm actually quite certain) that the volatility will drop. Will it drop to 20%? Probably not but it should change the relationship that Taleb is worried about in his charts. I'm certain that will happen because
-Instititions engage in rebalancing, they sell on the way up and buy on the way down
-Institutions dont call themselves apes and aren't as emotional (ie they are more disciplined)
-They have mandates, lots cant own more a few percent in crypto. Either because of explicit written rules or because of effective rules (clients will withdraw if the fund reports they have 50% in crypto, etc)
-They have drawdown limits. Most hedge funds will close up shop if they lose 20-30% of assets, as a result, they have to have more resonably sized positions. That prevents emotional driven moves (like selling at lows, which retail loves to do)
-They are more into historical/statistical analysis and tend to be more informed, on the average. The leads to less buying at tops and less selling at bottoms
-Other reasons I cant think of right now

So the issue is that Taleb is impatient, he wants to see his relantionship happen in his timeframe. But the market owes him nothing, who is to say that it cant happen in the coming 5-10 years? I didnt know one of the 10 commandments was 'thou shalt become a less volatile store of value within 12 years'.

Furthermore, all this volatility and BTC adoption has only increased, why people haven't left in droves? I'm yet to see any of the institutions that purchased in the last 1 year saying 'as a result of the current volatilty, we no longer see BTC as a reserve asset'. Maybe there a few out there but the vast majority havent changed their views
 
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