Thread by @thetaseek, 1/9 Thread - Trading Alpha lies in areas neglected by people, this [...]

1/9 Thread - Trading Alpha lies in areas neglected by people, this is probably why I don& #39;t use TA (because if everyone& #39;s doing it). While I post some of my thoughts and trades but I rarely give a & #39;satisfactory& #39; answer on HOW I arrived at those calls, so here goes for a past trade

2/9 & #39;The Big Straddle& #39;, Pre-Mar 13 trade
PnL of this Put trade was only around 40-50 #BTC

https://abs.twimg.com/hashflags... draggable="false" alt=""> 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">https://twitter.com/thetaseek...

https://twitter.com/thetaseek/status/1240104247972073478

3/9 Rationale for & #39;The Big Straddle& #39;

Credit Bubble

Genesis issued 1.1 Bn in loans in 2019 with 500 Mil outstanding. (screenshot taken from Genesis& #39;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

https://abs.twimg.com/hashflags... draggable="false" alt=""> 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

https://abs.twimg.com/hashflags... draggable="false" alt=""> to be dumped on us.

7/9 How did I time the trade? #BTC

https://abs.twimg.com/hashflags... draggable="false" alt=""> 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.

7/9 How did I time the trade? #BTC https://abs.twimg.com/hashflags... draggable=

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." title="7/9 How did I time the trade? #BTC https://abs.twimg.com/hashflags... draggable="false" alt=""> 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." class="img-responsive" style="max-width:100%;"/>

8/9 Thanks for reading and your patience for making it so far. Here& #39;s a new metrics, I& #39;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

https://abs.twimg.com/hashflags... draggable="false" alt="">?

9/9

- Will this accelerate adoption for people who have been complaining that they didn& #39;t have time to follow it?

- Will more people watch #Billions

https://abs.twimg.com/hashflags... draggable="false" alt=""> and then google about #Bitcoin

https://abs.twimg.com/hashflags... draggable="false" alt="">?

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

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