Some dry goods thinking about bitcoin trading


Recently on the blockchain entrepreneurship, the report should not be too hot, but what is the blockchain technology, bitcoin blockchain with what is the relationship between bitcoin how to invest, and so on, many of my friends are not yet very clear.

Today, I was sent a few reports by a friend of BitMEX, a bitcoin research team, who wished to be transferred to Einstein's readers and friends ~

1. Bitcoin is not a stock

The most common criticism of bitcoin is that it has no intrinsic value, which is entirely correct, but the same is true of the U.S. dollar and gold, who then begin to support their view by comparing the market capitalization of bitcoin with some of the largest blue chip companies. If bit The value of the currency is worth 250 billion U.S. dollars, while the market capitalization of company X is slightly lower. That bitcoin is definitely a bubble.

The value of a company's stock is the net present value of all future dividends, which means that the stock has intrinsic value, and bitcoin with no source of future revenue is idiosyncraticly lazy compared to a stock.

The second thing that bothers me in the bitcoin market is the concept many people do not understand about exchange rates, and if Bitcoin has no intrinsic value, then its price comes from the market's perception of its 'value' - which means bitcoin Comes from its exchange rate with another asset, including cryptocurrencies or legal tenders.Therefore, bitcoin may now be in a bubble or it may be worth more than it was before.

Take the weekly price chart for Bitstamp in USD / bitcoin since 2012. Looking at this chart will lead you to believe you are in a bubble in the US dollar and then burst. People who support cryptocurrencies have been labeled as modern The Cassandras label, which has not come yet completely because the end of the world of hyperinflation has not yet collapsed Real inflation concealed by government statisticians - by encrypting coin and multi-million dollar Hong Kong cage homes, Out of ugly head.

I can not prove that bitcoin is worth the current market price (in legal currencies). However, if one finds that bitcoin is just a fad of the fashion sought by young people and is foolish in economics, the arguments they used Must have economic significance.

2 on the bargain-hunting

Historically, January was a good month to buy cheap bitcoin, and in the past five years bitcoin has been bearish this month and eventually recovered from the decline (though in 2014 And 2015 took some time).

Think bitcoin will recover from the current market downturn and creative traders can use BitMEX products to try and increase their alpha while holding the currency.

At the time of writing, XBTH18 and XBTM18 were traded at spot prices of $ 100 and $ 800 respectively, with a spot price of $ 10,950 and an annualized premium of 4.6% and 16.5% respectively.

Historically, the average annualized basis for scheduled products has averaged between 25% and 30%, so these deals could be a way to buy bitcoin at a very cheap price.

For example, suppose that if the current price level immediately returns to a historical average: we will see a premium of $ 640 and $ 1,450 for XBTH18 and XBTM18, respectively.

So if a trader is looking for a bargain-hunting opportunity on bitcoin and thinks the basis should be back to historical average, he can get $ 540-650 in additional revenue through regular products.

3. Bitcoin and the dollar curve structure

Due to the increased liquidity of the BitMEX bitcoin / USD contract, a six-month term contract is finally available! The new contract is XBTM18, which expires on June 29, 2018. We now start the Bitcoin / USD contract interest rate deadline Structure.We can glimpse the important information about the future value of bitcoin from the market premium or discount on these contracts.

The graph above shows the percentages of the annual premium for XBTH18 (March 2018) and XBTM18 (June 2018) on January 4, 2018 and January 16, 2018.

Looking at the data for January 4, I immediately felt the curve was flat, and I expect XBTM18 to be significantly below or above XBTH18 in terms of annualized percentages, given the bitcoin price volatility that erupted in December.

If we travel back to January 4, I would suggest one of two strategies:

Bullish: Sell XBTH18 and buy XBTM18

If you think bitcoin's price will go up then this is a strategy to keep the price relatively neutral and why not? If your forecast is not correct then using a 3-month versus 6-month basis difference you The absolute loss will be much less.

If the spot price continues to rise in the coming weeks, the XBTM18 outperforms the XBTH18 because traders expect the price to soar in June and therefore buy in. This self-fulfilling process will make the XBTM18 premium an annual premium XBTH18 level.

Bearish: Buy XBTH18 and Sell XBTM18

If you think bitcoin's price will fall, then this is a relatively neutral strategy to keep prices in. If you are wrong, you can control your absolute loss through basis trading.

If spot prices continue to dip in the coming weeks, the XBTM18 will outperform the XBTH18 because traders will be selling at a sharp price drop in June.

What happened actually

Spot prices fell and the curve shifted. In addition, XBTM18 performed worse than XBTH18 in 12 days.

The XBTM18 is 0.59% and 1.92% cheaper than the XBTH18 at the annualized rates of January 4 and January 16, respectively. The average spot price for the two days decreased by 8.19%. Overall, the XBTM18's underperform trade performed well.

This suggests that there is corresponding support for the XBTM 18. The market does not expect the bitcoin spot's downtrend to continue into the summer, or to put it another way, the market hopes to keep thriving forever, and expecting a 100x leverage is a strong cocktail.

Trading Ideas: Sell XBTH18 and Buy XBTM18

This short period of price weakness makes the deal a good place to start, and if you believe the price will soon hit $ 10,000, or even $ 8,000, you can wait for a dip. In desperation, traders will Bargain-hunting offers a near-flat premium over the entire curve, and the XBTM18 may even trade at a discount if the market continues its bearish move.

Otherwise, the current curve structure is still a good starting point, and I think the general case is that the curve will translate upwards by 40% in parallel and the XBTM18 will shift in line with the XBTH 18. The premium for XBTM18 will continue to outperform in a bullish situation The market, annualized up to 50% to 60%.

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