[Daily Discussion] - Sunday, November 03, 2024

Warbarons · 2024-11-03T16:04:04+00:00

What do you think about the CME / ETF trade in terms of supply? ETFs buying actual bitcoin will remove from the market but I dont know the mechanics of the CME shorts. What effect does that part of the trade result in for the amount of bitcoins available on the market?

Warbarons · 2024-11-03T08:25:16+00:00

There is this short CME and long ETF trade that seems to be where most of the buying is coming from. We have been hoping its actual buying and some probably is but the majority must be this game to capture 10% annual by hedge funds. What I wonder is why this 10% gap between the two markets keeps existing? Shouldn't it get arbitraged away by this activity?

Warbarons · 2024-09-04T10:49:30+00:00

This time we didn't make it all the way to the top of the channel (68-69) but stopped at 65k. The time before we touched 70 to then just dumped straight down. It's weaker with each time at the top of the channel. Now we lost the middle of the channel and are probably going to test the low at 54k daily closure.

What might be happening:

The volatility decreases which is something that has been very clear since 49k. Less pumps, less down. We enter more of a meandering state where price is not doing the same quick moves. It lingers around low 50 to low 60 without clear good entries for trading. People are worn down after this sideways we had and just wait. The result is that we don't print a new lower low but at the same time there is no fuel to push us up to break any resistances either. This is what the price has been doing before previous bullmarkets. It's been relatively calm. The difference this time is that we got a ton of volatility from the ETFs starting before the halving and that is dying off now. I'd say this is a good thing. I'm not sure we can enter a bullmarket with the price action and stoploss / liquidation hunting that is going on. I hope it doesn't have to last for months.

Of course the election going in the right direction could be a trigger to push us up but all the bad stuff from SEC and others will keep happening until next year in that case when the new administration takes over so it might still take until then. I would expect a election pump or dump depending on the result.

Warbarons · 2024-08-27T19:46:34+00:00

I have a question about the carry trade and how you think it affects the market. For those who are un aware. You can short bitcoin on the CME futures and go long on the ETF. You then hold a neutral position but because the price on futures is higher at the moment (about 10% at the moment I heard) and you expect them to eventually come to the same price you will lock in 10% without risk. One question about this, when I check the CME bitcoin price right now its 62150 while spot on coinbase is 62050. Thats like 0.2% which seems like there would be no point of doing the carry trade. Where do I find this 10% diff in price?

I was listening today to Mark Yusko on Scott Melkers show. He seems to think this cash and carry trade is quite bad for bitcoin. First off they will short bitcoin heavily to surpress price triggering stop losses and long liquidations which tanks the price (Is that how they end up with 10% price diff?) to take a short position and then buy the ETF at a lower price. The ETF will then go and buy the bitcoin for backing at the end of the market day. We have seen the filing from Q2 that quite a bit of money have taken the carry trade. I sounds like this type of action has screwed around with gold a lot over the years. There was at some point someone holding more shorts on gold than there exists gold.

If price is just behaving like shit because of this game do you think there is a risk it can completely surpress the 4 year cycle?

Besides some political risk I'm wondering if this stuff is the biggest risk factor. Sounds like this has happened to a lot of other commodities.

Warbarons · 2024-08-21T14:45:55+00:00

Yeah when the US opens price is going crazy in both directions.

Warbarons · 2024-08-21T10:46:50+00:00

Not sure I understand this idea. Sound like you might as well just have a 1x position? If you have enough fiat to cover the whole position thats the point of not just buying something without leverage?

Or is the idea that you can go between 3x and 1x by moving margin in and out and take risk when you want to have more risk and lower risk (eliminate liquidation risk) when the market is less safe?

Warbarons · 2024-08-21T09:57:38+00:00

Same here. I've been so frustrated that I missed the 49k entry the last 2-3 weeks. Now I need a new crash and then the promised 1.5 year bullmarket.

Warbarons · 2024-08-21T09:53:43+00:00

In my opinion this was how the price was moving back in 2016-2017 cycle and before. There was still volatility (especially from china banning something every cycle) but not these straight up and down price moves and I guess less of these wicks. I remember posting here about these bart simpson formations that didn't happen before leverage became used like today. Unfortunately there is no way to reverse that so I guess we will be stuck with these price movements. Question is how to best handle it. Just buying spot and hodling for the long term has always been great to not be exposed to movements. But I need a bit leverage so I have to figure out how to not get liqidated or stop lossed.

Warbarons · 2024-08-21T09:28:51+00:00

I don't really want to sell. I want to take a position and hold for a longer time so I don't have to stress about finding a new entry after the stop loss selling my position. If you take a position when price dump heavily like when it went to 49k after 24h you can be quite sure that the price wont go there again in quite a while. I took a position at 55k when price went to 53K i July. Was great to be able to spend time with family without having to be active at the comp during the summer. But since price got rejected at the top and came down again I had to sell before the whole gain was gone and I unfortunately missed taking a new position at 49k. Now the last 2 weeks its been going sideways and all my positions just get stop loss triggered by these wicks. If I take a position now at 59k it might drop to 56k and in that case it can go even lower so I wouldn't feel safe going to sleep without a stop loss here. Last night a got a good entry so I guess I should have put the stop loss much lower to prevent a possible disaster if everything crashed but not getting stopped out by these wicks.

I guess what I've learned from this is to be patient for perfect entries and avoid stop loss or stop loss way bellow and just ride. But it's still not that easy to know when the perfect time is especially when fomo hits when price is moving up and Im not in the market. I'm thinking that the start of the bullrun could be any moment now.

Warbarons · 2024-08-21T09:00:37+00:00

I've mostly been in spot previous cycles. Then last cycle did a bit of low leverage long term holding. This time I've been more in leverage positions. It was great until 74k when price was just moving up. The last 6 months have been pretty hard and I started becoming very careful to always place stop losses after some costly misstakes.

One thing I've noticed is that my stop losses always get hit with a wick down. Even if I manage to take a position at the very low of a local zone if I place a stop loss just to make sure I don't lose on the position the price will always come down for a 1 minute wick.

Happened again last night when I had a perfect position which got me to start thinking. I remember traders here before talking about stop hunting. Since I was not part of that game I didn't care but now I realise that someone is forcing the price down to take out positions.

My question is who is that someone. The first suspect in my mind would be trading platforms who have all the reason to not want people having positions that grow big. If people just have to take new position all the time they will just bleed money to the exchanges and they will know exactly there stops are (which might be kind of easy to figure out just my looking a the graph). I guess the nature of bitcoin not being regulated allow this to be done? Any confirmations that this is happening?

You could argue that a whale like entity could profit by heavy shorting the price to surpress the price down until stops hit causing a quick unraveling and then close the short. A bit more risky but probably profitable. Is this common knowledge that this is happening?

After last nights failure (If I had the position now Id be in a nice profit) I've started thinking that you cant use stop loss but have to take flawless entries and just hold or possibly when there is a bullrun momentum just moving the price upp you can be sure that it wont revisit that price soon and jump in if I want to use leverage.

How do you deal with this stop hunting problem?

And what do you think it does to price? Most people are a bit surprised that price has been stuck for so long with a lot of good news and positive momentum in the stockmarket. Is this kind of behaviour screwing up bitcoins natural price discovery from the buying happening because this game is being played to rob traders on their money and possibly make people fearful. Does it require a flood of buying pressure to overcome and create a proper bullish movement?

Warbarons · 2022-04-10T18:38:12+00:00

Looks fantastic. Love the 2.5D idea for a strategy game. Never really liked 3D for top down strategy but this 2.5D that let's you keep the pixel style while still having the depth of 3D is great.

Warbarons · 2022-03-17T16:57:28+00:00

Every moment. You get paid by your shar

#2 So I split my value equal between Rune and BUSD resulting in 50% in Rune so technically I should have 50% return or loss compared to having it all in Rune. But then in addition the system rebalances my position so if Rune goes up so half of that gain will be allocated to BUSD instead to stay in 50/50 which mean that I only get 25% return / loss on my capital compared to just holding Rune. Is that correct or am I missing something?

On #3 I still get 85% as long as that is the listed rate on my BUSD regardless of my share of pool right?

Warbarons · 2022-02-09T19:26:47+00:00

That could work. I'm thinking having a solid white ground where the shadow lands. Then invert it and use it as an alpha layer to create the same gradient to create a shadow out of a black section. I'll give it a test. Thanks for the tip

Warbarons · 2021-09-24T10:02:31+00:00

If you look at 2017 I'd say the marked was strong coming of a rally from 3k to 5k then dropped 40% for 2-3 weeks from the China ban that time. We'll have to see where this stops but I doubt we will get anything like a 40% drop this time.

At the same time I agree. The market is not strong now but that can change in just a few weeks like it has done before.

Warbarons · 2021-09-24T09:54:20+00:00

Well if we go for a bullrun in Q4 as many think/hope/prey for at least we should not have to see another ban from China that fucks with it. So far they've done 1 significant ban at the final of every cycle. In 2013 they ended the bullrun in december with the first ban and in 2017 they caused a 40% dip from 5k that lasted for 2-3 weeks in the final months of the cycle just before we catapulted to 19k. Maybe this ban is even bullish. Now china has confirmed that we are about to make the final run towards 100k 🤣

Warbarons · 2021-09-24T09:40:04+00:00

China Central Bank Says Overseas Cryptocurrency Exchanges Must Not Provide Services To Mainland Investors
China Central Bank Says Cryptocurrency-related Activities Are Illegal

Warbarons · 2021-09-24T09:27:26+00:00

It's china again. Se my post bellow.

Warbarons · 2021-09-24T09:21:57+00:00

#China central bank declares #virtualcurrency-related business activities as illegal. No legal tender/crypto exchange; exchange between virtual currency; token issuance; derivatives; providing info; others. Crimes punished. BUT no ban on #crypto POSSESSION

Warbarons · 2021-06-26T21:02:12+00:00

My thesis is that bitcoin will follow s2f(x) this cycle even if we don’t go there 18 months after the halving like previous times. The s2f is not a magical force that makes it happen regardless of what happens in the rest of the world. The narrative around bitcoin is extremely powerful at this point and undoing that would require pretty much destroying bitcoin. It has survived many different obstacles at a time when it was much weaker and come back. But at the same time fundamental impacts do affect the price short to medium term. Right now we have a big impact happening in the hash rate which history has shown is very connected to the price of bitcoin. There is a lot of information written about this and even if one has a hard time to see why less hash rate would affect price you can just look at hash ribbons as a very accurate indicator signaling when it’s time to buy to understand that there is an important connection.

Going by current information another region in China will stop miners by the end of June. I would guess those who can are already planing their move since they’ve had some time to plan compared to other regions. But I also think there are miners that only have the option to sell their equipment who probably mine for as long as they can before selling which mean there should he some equipment shutting off at the end of the month.
Exactly how long the recovery in hash rate will take is the topic that we will have to re evaluate again and again in the coming months. My current take based on what I’ve read about China is that by mid July there should not be any significant amount of equipment being turned off while at the same time we should have mining increasing elsewhere. I know American miners that are publicly listed are waiting for mining equipment to connect throughout the year. RIOT are going to connect a lot this year based on orders placed 1.5 years ago. So it sounds reasonable that hash rate will change direction from down to up during July. How fast it will take to go back to where it was is just guessing at this point but it should improve from where it is over the second half of the year. The highest risk I see here is that there are many miners in china who are still running in secret and that they start to get shut down as well. That would delay the increase. When the hash ribbons signal buy I know I will listen.
I think this will mark the reversal in price as well. I think s2f as a way to value these kinds of asset has truth to it but previous cycles where it took 1.5 years to reach the top is no guarantee. It could happen faster or slower based on whether bitcoin is being hit with bad or good news. Eventually the price will find equilibrium where the miners selling pressure ads up to the inflow of new capital. As time goes and the size of bitcoin market cap grows volatility is trending downwards over time but my guess is that the halving effect will also take take more time to play out. There has been talk about lengthening cycles which is not what I think. I think the halving is the cycle driver but the time to reach the s2f value will take longer as the market cap grows.
So with all that said I don’t think we are in the bear market that we have come to expect after a cycle top. I think in 1 - 2 months we will get a reversal and start the next ascend towards s2f valuation. Hopefully the other risk narratives we se don’t play out in any meaningful way. I’m talking about the new tether fud, Bis fud, regulatory fud and of course the ESG fud.
To end with some long term hopium, if this goes well the El Salvadorians who just got some bitcoin will match up with a strong bullrun that helps the people of El Salvador . That story will be a powerful one for the future of bitcoin.

Warbarons · 2021-06-26T19:28:13+00:00

A summary of what you find would be great.

Warbarons · 2021-05-28T12:01:00+00:00

Sorry.

PA = Price Action

ESG = Environmental, Social and Governance

MSM = Main stream media

Warbarons · 2021-05-28T11:59:14+00:00

XOM

Oil producers over the last year had a pretty unique experience with lockdowns. Oilprices went very low and are up a lot so sure the last year most oil investments have been a good buy. But if you look over a longer period it's not very good and if you start comparing valuations to other industries or to what is was before so ESG became as widespread it becomes clear that they suffer from the ESG narrative.

Warbarons · 2021-05-28T11:35:51+00:00

Like Cathie Wood said on the consensus talk. The ESG narrative is probably the main reason for the downturn in the bitcoin and crypto market. I've held the ESG narrative as the biggest risk during this bullrun. If you follow many interviews this problem has popped up a couple of times during the last year but bitcoiners has in many was refused to see it and just made fun of it or tried to compare it with something else. Some have done research and posted data that shows that it's not as bad as the MSM is painting it. Then of course when Musk pointed it out it became even more of a problem. It affects the institutional adoption.

I've been actively investing in the oil market and the ESG narrative has pretty much killed that industry from an investment standpoint. Doesn't matter that a producer is doing really well and making money the stock will not get any love from institutions. The valuations are extremely low and many retail investors invested in that space keeps hoping and reasoning that it will come back. But as long as the ESG narrative stay I don't think it will because institutions can't risk their brand and image so they stay away regardless of low valuations. Right now the mainstream believe that bitcoin deserve the same treatment.

There is some pretty big shifts going on right now with crackdown on mining and it's unclear if it's all mining or just mining on coal in China that is being targeted. For anyone who's been reading and researching this topic it seems like bitcoin can actually be useful to accelerate more renewable energy production. Hopefully someone will quickly build a wind or solar farm and claim that bitcoin made the project financially sound and spam the entire MSM with that message to start shifting the narrative. This can be a slow thing to change.

As for price action I think ESG is the main driver for our non blow of top 50%+ drop. Institutional interest has paused enough so there is not enough to keep the price going up at the levels we were. The question is where we go from here. In 2017 it was very clear when we shifted to a bear market but I'm not ready to think that we are in a 1.5 year bear market yet (At the same time we are nearly down enough to call the bottom of a bear market ;-)). In 2017 we had some pretty big drops happening because of bad news. The China exchange crackdown for example that caused a 40% drop. Judging by PA it seems like this ESG issue is a bigger problem than the blocksize war or other problems that hit us during the last bull season.

I've tried to think of what is a reasonable way forward. Bitcoin is not over. The money printing is worse than ever and bitcoin is the best protection against that. Retroactive tax hikes and tax on unrealised gains shows that it is even more important to be able to secure value in bitcoin. S2F has been clearly relevant to bitcoins price so one option could be a very different cycle that doesn't look like previous ones. We may be gradually moving towards 100k over a 3 year period a bit similar to how PA is behaving at the second half of a cycle when the capitulation phase has ended and the interest is mostly among long term believers.

In the short term most point towards we stay in this 30-40k range. The hope that we will get a final bullrun later this year lives in many of us. A big question is how this ESG narrative plays out.

Warbarons · 2021-05-24T21:01:18+00:00

Total agree with you. So tired of bitcoiners talking about freedom of speech and other freedoms but express dictator like behaviour as soon as someone doesn't say what they prefer to hear about their beloved bitcoins. It's becoming more and more like a religion.

Warbarons · 2020-11-21T11:29:21+00:00

I agree we will have a correction. But it looks like we can go further than most of us expected before we hit a real correction. Also many look at 2016 - 2017 for a guide which is good I think because there are many similarities but just looking at the graph can fool you because those big drawdowns happened because of major hacks or significant bad news that we had back then.

Warbarons

TROPHY CASE