Thread by @RenCryptoFish

Financial markets are fractal across time horizons. In short time horizons, when someone causes market impact market makers (@AlamedaTrabucco/@mgnr_io) go to other exchanges or similar products to provide liquidity

https://twitter.com/Arthur_0x/status/1416308601556066313

What if the flow is too big for the market makers? It spills over to midfreq quants and scalpers like (@Galois_Capital ,@CL207) to evaluate whether the impact is informed or uninformed and might revert it or might continue it.

What if the flow is too big for midfreq? It shows up in the daily candles and now (@zhusu, @joeykrug types) have to decide if they want to provide longer horizon liquidity based on their macro view. At longer horizons for a 100-200 vol asset that trends, even

if you're confident on the fundamentals in the long term, when do you buy especially if you're trading your own capital. If it's not prop capital, a lot of funds don't have LPs that are okay with a 80% drawdown. In tradfi, the low freq fundamental mutual fund/quant group

help revert price back in line with fundamentals despite being the bag holder a lot of time for faster long/short hedge funds. Neither group really exist in crypto yet, but probably will emerge over the next cycle. Fundamental based index investors will help as well.

** a more liquid options market beyond btc/eth will help long term liq providers hedge tails as well, beyond just buying puts often there are cheap vol term structure trades to express similar tail hedges

tldr, the low freq fundamentals based backstop is not really here yet