The macro market DOES drive crypto, but only when it has to. In March 2020, crypto had no choice but to go down with (e.g.) SPY — the whole world was watching, and when the whole world watches people will buy BTC when it lags below SPY, and vice-versa.
Honestly? Crypto traders don’t give a shit about what happens when the traditional markets aren’t going crazy. I literally couldn’t tell you which direction SPY moved .3% in (or whatever) yesterday.
But when SPY crashes 20%? Yeah, we’ve gotta follow it. And because we’re following it, our trades will follow it — not all the time, but enough for a correlation to exist.
(And this coincides with high liquidation environments which means crypto will actually have a >>1 beta, see March 12.)
So in calm macro environments like we’re in now? Little correlation. But the next time there’s a big move (in SPY, in oil, in whatever the market ALL cares about) — watch for this, it’ll come back.
Here's an instance from September where SPY mattered -- for the past year+ BTC developed a real SPY beta basically every time there was big COVID news which had market-wide impact.

And here's the day (and really it was kinda just one day, super weird) when gold took up the mantle.

There's a TON to be made by watching for this stuff -- often the monitoring is most of the battle because it's critical to be ready to do these trades, and you've only got a few hours or something until the market catches on and the relationship is too fast, or arbed out.

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More from @AlamedaTrabucco

10 Jun
Let's look at two investors, Adam and Beth. Both are 25 years old, both make $200k/year (lump sum) and expect to keep doing so for their careers (not realistic, but let's just use that for now). Adam invests it all in a 5%/year fund, Beth's fund is 50/50 to make +30% and -10%.
By age 60, Adam will always have around $20m put away (ignoring taxes and expenses or whatever, but this is just a comparative exercise so it's OK to ignore thise) -- there's no uncertainty here.
What about Beth? Her EV on earnings each year is higher than Adam's, of course, but let's dig deeper. Let's look at her distribution of outcomes by age 60.

One natural question: what are the chances she has more money than Adam does?
Read 10 tweets
7 Jun
I'll be honest -- I was dreading this conference. I'm not great at meeting strangers, I dislike much of networking, I was vaguely concerned that crypto culture might be toxic in person, and I'm not wild about public speaking. Also, Miami is so hot.
How wrong I was! I enjoyed basically the entire trip -- it managed to be productive, invigorating, sentimental, and super fun all at once.
I was pretty sure the perfect timing + chance to speak meant this was the only conference I'd ever attend, but now I doubt it.

A thread about being wrong and not really making money but "generating personal value" or something.
Read 25 tweets
4 Jun
Let’s just say @SBF_Alameda was lied to about what “Tradjng Day” was gonna be Image
“We host the world’s best athletes and the world’s best entertainers, and we’re thrilled to welcome FTX” Image
“I may be the shortest one here” Image
Read 7 tweets
3 Jun
On a plane to Miami, thinking about the topic of the panel i’m on: Is it possible to time the market? It’s a great question, and one my priors were REALLY wrong about.

A thread about being wrong and making money.
My initial training in quant trading came at SIG, trading more traditional assets than crypto (let’s hear it for fixed income ETFs). These are markets that have existed forever, and many large, skilled firms have traded them forever.
In these markets, it’s really hard for there to be large, fairly obvious, predictable moves — if those existed, these big quant firms would have figured them out too and arbed them out (or similar).
Read 14 tweets
23 May
BTW not to be a downer but the stablecoin supply being up is less obviously +++ than a lot of people have claimed.

There are plenty of reasons why it could be good -- more USD flowing into the ecosystem could of course be used for buying crypto ...

... but, it could also be used to be parked in a yield farm, or as collateral for someone trying to get super short, or whatever.

Also, consider a common trade -- USDT gets really rich, MMs (such as Alameda) create USDT to sell it >1. This increases stablecoin supply!
Why does USDT (or any stablecoin) get rich? Various reasons -- maybe people really need something USD-like and so bid it up (because they're not creating for whatever reason). But maybe the BTC/USDT market has significant activity.
Read 6 tweets
23 May
FWIW this is the sort of move which hasn't happened in quite some time:
- big moves have basically all been driven by liquidations lately
- ESPECIALLY "low-liquidity" ones such as on weekends
So I think looking to data for the answer about what to expect as the weekend wraps up and liquidity increases is misguided -- intuition is likely gonna beat it.

What does intuition say?
Let's think about the features which distinguish this move / set of market conditions from other ones.

First: low liquidity and low volume.
Read 16 tweets

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