1/9 Thread - Trading Alpha lies in areas neglected by people, this is probably why I don't use TA (because if everyone's doing it). While I post some of my thoughts and trades but I rarely give a 'satisfactory' answer on HOW I arrived at those calls, so here goes for a past trade

2/9 'The Big Straddle', Pre-Mar 13 trade
PnL of this Put trade was only around 40-50 #BTC because part of the trade was a hedge and we lost the premium on the calls we bought, breakdown:

1) Short 65 x 10K Puts Jun 2020
2) Long 100 x 8K Calls Apr 2020 https://twitter.com/thetaseek/status/1240104247972073478

3/9 Rationale for 'The Big Straddle'

Credit Bubble

Genesis issued 1.1 Bn in loans in 2019 with 500 Mil outstanding. (screenshot taken from Genesis's website)

Our estimates are that there are around 4-5Bn loan outstanding in the entire market. (BlockFi, Celsius, Babel etc)

4/9 So what does it mean? It means that 4-5 Bn of $USD is being loaned out to people like Miners, or users of BlockFi, Celsius etc. And with more players entering the market, $USD borrow rates went through the roof hitting close to 60% APR (data from Bitfinex)

5/9 LTV (Loan to Value) for these loans started at 33% but eventually went higher as the space got more competitive, going as high as 80%.

Now assuming the average LTV on $5 Bn USD is 50% (conservative), it means that $10 Bn #BTC is being used as collateral, pre-halving

6/9 The logical conclusion is that one of the 2 is going to happen.

i) We moon and these guys take out more loans to pump the price further up
ii) Or we crash >20%, causing 80% LTV loans to get liquidated and cascading liquidations causeing $10 Bn of #BTC to be dumped on us.

7/9 How did I time the trade? #BTC Implied Volatility was trading at that time 70% on @DeribitExchange and I thought that the risk mentioned above was hugely under-priced and therefore went into a straddle, preparing to take 60 days of decay if I was wrong.

8/9 Thanks for reading and your patience for making it so far. Here's a new metrics, I've been thinking about. #COVID19 and isolation will be the new normal moving foward. With 1-2 hours saved on commute/dressing up, what % of time goes into reading and learning about #BTC ?

9/9

- Will this accelerate adoption for people who have been complaining that they didn't have time to follow it?

- Will more people watch #Billions and then google about #Bitcoin ?

- If they enter the #crypto market, what will they be buying first, from where and how?