Really nice uptick in the portfolio this morning driven by 3 high conviction plays. See thread below 🧵
$1.64m / 531.2 ETH
1. We've been adding to $SCREAM, xSCREAM, and FTM-SCREAM LP at $60ish the past 48 hours (now $94). This has netted us over 12 ETH in profits.
2. We have been building and staking a position in $CREDIT for the past 48 hours, average entry $2.29 (now $5.53). This has made us another 5 ETH. Staking APY is currently 241.88% APY
3. We bought a lot more $BTRFLY at $1984 yesterday as outlined in real-time on my feed. It was too good an opportunity to pass on and is so far +28% inc. rebases. This has added another 3 ETH to the portfolio.
Overall, the only portfolio laggard has been $NEWO, which we had previously booked profits on at $1.24 and then decided to re-enter lower:
Still quite defensively placed but hopefully, the 3 plays above highlight our ability to take strategic plays with remaining stables during periods of heightened volatility whilst the rest of the portfolio is positioned for stability.
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Here's a statistical approach for thinking about pair trading ✍️
This framework might help you no matter what your strategy is.
Let's take a deeper look at $ARB / $LDO, and how you might profit from this...
There are 2 ways of pair trading:
1) Narrative based 2) Statistical Arbitrage
Most trades on Pear Protocol are narrative trades i.e. you build a story why Asset A will outperform Asset B (in any market condition) and enter a long/short pos.
Here we'll focus on 2) Stat-Arb
Q1 - "Is there a statistical relationship between these two assets?"
Usually we jump to correlation for this (see below image lol).
More important than correlation, is this relationship between $ARB and $LDO constant over time? AND does it mean revert when it deviates away?
1. If you, as a retail buyer want to buy $IBTC (the iShares spot bitcoin ETF), then you'd go to your broker/online platform and swap your $ for shares in the ETF. The broker would go and buy the shares on the exchange (Nasdaq) on your behalf. Easy.
2. This is what we call the 'secondary' market. The shares already exist, and you can buy them at the market price. But what if there are no ETF shares available in the secondary market?
People don't really understand what Blackrock is, or what they do.
So let's go inside...
But first a little about their founder and CEO Larry Fink, since it will be important later
Larry joined Wall St in 1976. He was smart and made money. He pioneered the idea of debt securitization (packaging up different loans as bonds). He then ran the trading desk for those Mortgage Backed Securities (MBS). Yes, those bonds that led to the 2008 GFC 🤯