BTC took forever to break through $20k -- I talked about the day when it finally happened here:
Right after it broke through, I noted in the thread that our big intuition was that it would RIP up even more. And then rip, and rip, and rip -- which it did! We were confident because of what we knew about liquidation behavior near recent optima ...
... and this was a GLOBAL optimum, so we knew there'd likely be tons of liquidations once it broke through $20k. So, once that happened? We literally got as long as we could, given the liquidity, and without fucking up our execution too badly.
And we kept doing this as BTC was rising! Because, as it rose? Higher prices -> more shorts liquidated -> etc. Huge momentum potential that kept materializing! I think we nailed this, couldn't have been buying much more without crushing markets and getting bad prices.
When $30k came around? We thought the same thing would happen but we were WAY less confident. There'd just been less time for big shorts to get put on, so we didn't know if there'd be the same effect. Notably, though, we DID think it would happen in EV.
And it did! Around as strongly. And we did bet on it! But we were way less confident, and, accordingly, we bet it way smaller.
Does this make sense? Maybe -- sometimes if you're not confident about a big effect like this, betting big can be iffy because there might be huge selection effects, or if you're wrong you might pay a lot to get in and out.
But ... Alameda has good execution, and suffice to say we did not really approach the limits of how much we can execute without paying too much through books. I think we screwed this up -- there wasn't great reason to think there'd be selection effects, and we KNEW this was +EV.
It served as an important lesson for us -- for a coin as liquid as BTC? Rarely a reason to think you have a lot of edge in a trade and not just bet BIG. We're lucky to have large risk tolerance -- we can take swings, and that LETS us get it in good. We've gotta do it when we can.

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More from @AlamedaTrabucco

14 Jan
Ah, election trading. I think trading the election in November was some of the most fun I've ever had in my life ... for the first day. Maaaybe the second.

Kinda wasn't expecting it to last 3 months.

But, always a silver lining: people were bidding TRUMPFEB high. WAY higher than we ever thought was reasonable -- we couldn't find a single informed source who honestly believed the probability of Trump remaining in office was higher than 1% or so. And LOOK at this chart!
We quickly decided we believed our fair way more than the market and that there were no real selection effects here -- it all became a question of maximizing the amount of $ we could make from selling into the bids.
Read 11 tweets
14 Jan
As I've been saying a lot lately on Twitter, Alameda is quite comfortable with the Tether team, and we do a lot of large creations! I talked about that in more length in this thread:
What does "large" mean, though? Well, it depends! And it doesn't just depends on any absolute metrics, or on market conditions, or whatever -- it also depends on our own ability to think through the question of "how much should we create" and "how much is like, too much, c'mon."
Soon after we got set up to do creations, we did some initial studies to determine how much we could sell above $1 + X + Y + Z, where X was creation cost, Y was "execution cost," and Z was "cost of tying up capital." We also charge for our time and add some edge somewhere.
Read 13 tweets
14 Jan
During this period, when XRP was plagued by rumors about the SEC's investigation into Ripple, we realized pretty early on that XRP's price was *really* reactive to headlines -- in a fairly surprising way.
The big news obviously had big impact -- it fell a TON when that first happened. As a bit of a side note, how to size bets on that first crash? In this case, we of course were confident it was ~bad~ -- how bad?
We decided a few things:
- probably, *we* were not the people with the best handle of like, the legal landscape, to the point where we didn't think we had a "fundamental understanding" of how bad this was
- probably, it didn't matter a ton, because liquidations
Read 9 tweets
14 Jan
Amidst OKEx's withdrawal suspension -- there was a big level one concern -- Alameda does trade on OKEx, and we had some funds locked there. Was there anything to do?
Eh, not really. There were OTC markets like, 25% down from spot that various people were bidding for OKEx funds -- but once we accounted for actual risk (seemed small, the chances it was actually seized seemed *really( small given what we knew) and opportunity cost, seemed bad.
Seemed *really* bad, actually -- we thought anyone selling into those bids was WAY overpaying for insurance. (A big part was that OKEx trading remained great, BTW -- that made the opportunity cost quite small).
Read 7 tweets
14 Jan
Bigger is Bigger (when Betting is Better)

A thread about getting it in good.

(And a title about mocking @SBF_Alameda's little puns)
Getting it in good is a poker term referring to the idea that, when your odds are best (strictly speaking, EV of winnings, not odds per se), you wanna bet more. For many players, the ability to recognize spots where this matters is the difference between playing + and -EV poker.
Example: with top pair vs. a flush draw on the turn (and say you're confident about this, and you opponent knows that, etc. etc.): if they miss the river you're getting $0 more, if they hit you lose. So you want to get your opponent's chips in the middle on the turn!
Read 23 tweets
11 Jan
BTW, to connect some dots here -- a lot of the people seeking access to a coin like USDT *aren't* doing so via creation. They're often doing so via just sorta buying it in the markets -- and they're buying a LOT, and REALLY aggressively.
The premium with which USDT trades to $1 is pretty volatile as a result -- as I type this, the average BTC/USDT market (as compared to BTC/USD) is trading about 15bp lower, implying USDT = $1.0015 or so. And that's all from people AGGRESSIVELY selling BTC vs. USDT to get USDT.
And note, *these* are the best markets to use to determine where USDT is trading -- the combo of BTC/USDT and BTC/USD markets, e.g., are WAY more liquid than any exchange's USDT/USD market, so the prices from these (even though it's a two-leg trade) matter way more.
Read 11 tweets

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