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Day 6 binance trading bots
Bankers are flocking to the cryptocurrency industry as both principals and employees of related companies, fund managers, and as individual traders. The firm then proceeded to ditch its conservative German roots, and import the biggest swingers in the industry. A clique of Merrill Lynch bankers were brought in. Their ring leader was Anshu Jain. The culture was cowboy. My Hong Kong summer internship interviews in illustrates this point. The first round of interviews was in Philadelphia.
I had just returned from my semester abroad in Hong Kong. I then rattled of a list of my favourite establishments. In , financiers thought they were gods. Hong Kong has never regained the energy I felt that summer.
I interned on the Equity Derivatives sales desk. HR nicknamed this desk the Snake Pit, because of the aggressive personalities that worked there. The graduate training program in London featured similar aggressiveness. Deutsche offered an all expense paid trip to London for three months for all incoming graduates.
The Japanese grads were the most intense. One grad got so drunk, and vomited so hard, he was hospitalised with a broken rib. That is a taste of how the youngins were trained at Deutsche. The firm fostered an aggressive culture focused on partying hard, and making money. Unlike more demure banks, no one at Deutsche was shy as to why they were in the game. Making money was the goal, and no one was censured for being too flashy. As the financial services industry entered a secular decline after the GFC, Deutsche people scattered to the wind.
Deutsche lied to the German regulators about the value of its assets in an effort to avoid becoming recapitalised by the taxpayers. In hind side, that was the dumbest move ever.
Their competing American banks gladly took TARP funds, paid huge bonus, and repaired their balance sheets. Deutsche limped along, and is one of the worst performing banks since the crisis. The Deutsche Hong Kong reunion was ignited by Bitcoin.
For some reason, this particular office is very well represented in the Bitcoin industry. The individuals I will list all went through the graduate training program, and our Deutsche stints all overlapped. He worked on the commodity structuring desk in Singapore, and then worked with me on the delta one ETF market making desk. He worked on the Flow and Exotic Index Volatility trading desk. Andrew Rizkalla , Trading Lead at Paycase, member of the graduate class.
He worked on the Program Trading and Facilitation desks. He worked on the Equity Derivatives Sales desk. He worked on the Program Trading and Facilitation desk.
Neelabh Dixit , co-founder of Cryptomover, member of the graduate class. He worked on the Portfolio Trading desk. He worked as a quant strategist for the Absolute Strategy Group. Due to overbearing and counterproductive financial regulations, innovation is often rewarded with heavy fines and loss of licenses. An institution with billions of dollars of revenue at stake cannot take the regulatory and reputational risk dealing with Bitcoin unless someone else does it first.
For over four years, the firm pestered the CFTC to allow them to clear Bitcoin settled futures and options. The hard work paid off this fall when their markets launched. Less than two weeks later, the CME announced they too would join the club. Large FIs are severely constrained in their ability to deploy large amounts of capital due to counterparty risk on exchanges not compliant with their specific jurisdictional overseers.
An exchange who they can already trade with, the CME, that offers Bitcoin trading products is exactly what they need to seriously get involved.
A USD-settled Bitcoin futures contract is perfect for large traders who cannot or will not custody Bitcoin. This futures contract gives them exactly what they desire, a product that pays them fiat currency to speculate on a crypto currency. This product requires almost zero technical innovation on their part.
The CME index will include itbit and Kraken as well. For market makers who must hedge flow on the underlying exchanges, two seriously liquid derivative contracts will increase the volatility in the spot markets. Can these four exchanges stand up to the likes of Citadel submitting, amending, and cancelling thousands of orders per minute? Time will tell, but the CME is about to get a crash course in Bitcoin.
These issues probably influenced the way in which their index was constructed. The index methodology is overly complex in an attempt to deal with the forecasted liquidity and technological issues the leading spot exchanges face. Every financial reporter will be watching for any misstep, and the headlines will come hard and fast highlighting any issues. The Bitcoin markets are highly fragmented due to different regulatory regimes and cultural differences between traders from different domiciles.
The type of trader who can trade with the CME cannot trade with many of the exchanges where the reference pricing occurs. This presents a trading opportunity of a lifetime for arbitrage funds who can straddle the regulated and unregulated exchanges, and who can trade across multiple jurisdictions. Will the regulated derivatives follow or lead vs.
From a market microstructure perspective, this will be a very interesting experiment. While futures will allow wealthy individual traders and large FIs to comfortably trade Bitcoin, an ETF that appeals to retail investors globally will completely change the paradigm.
I did not expect institutional take-up of Bitcoin to grow this quickly. There is too much money being made by startups in the space for large FIs not to get involved. As more and more of the regulatory and repetitional risk is removed, institutions will continue to increase their involvement and exposure.
Positioning has begun in earnest. Three weeks hence, the futures basis indicates aggressive positioning by traders heading into the hard fork. In this post, I will examine advanced trading considerations and unwind strategies. Bitcoin is up over 7x since January this year. Given this aggressive bull market, futures should trade in contango. Longs must pay a substantial amount of interest to entice shorts to position themselves against the trend.
Each quarterly contract existed during a price rally. The above chart illustrates that XBTM17, which experienced no hard fork during its existence, had the highest premium and discount.
This time around most savvy traders are short XBTZ17 basis. Any time the basis trades flat to positive, they increase their short position.
However, once the fork is over large percentage of the XBTZ17 open interest must close their positions. Many traders might close their XBTZ17 short at a mega discount pre-fork, then switch to long basis to play the relief rally.
But if everyone is the same way, many will give up profits during the unwind. Additionally, bullish speculators will jump in pre-fork to take naked longs anticipating a sharp rally after the fork occurs. The XBTZ17 market is primed for a short squeeze, and I believe profit maximising miners could initiate an even sharper rally higher. The miners signed the New York Agreement NYA in an effort to save face and acquiesce to activating SegWit, while at the same time securing larger blocks in the future.
As it stands now, there is no need for SegWit2x Bitcoin. However, the majority of miners continue to signal for the NYA.
Signaling for the NYA costs them nothing, and it does not mean they actually will support the hard fork with hash power. You know the answer, Pump City. The other consequence is a violent resetting of XBTZ17 basis. All those who went short basis to collect the B2X dividend would rush to unwind their trades at the same time.
That means the leveraged used by shorts will increase further putting their positions at risk of liquidation during a short squeeze. It will either become Bitcoin or nothing. That is why they refuse to implement replay protection which allows exchanges to safely support B2X. In the event exchanges delay the listing of the B2X by even a day, by the time you theoretically could sell B2X, it might be worthless because it failed at supplanting legacy Bitcoin.
If you went short XBTZ17 basis at a flat to positive level, you are in the money. Closing the trade early and earning the expected dividend is prudent due to the fundamental differences between B2X and BCH. As we explained in our piece a few weeks ago, Bitfinex allow their customers to trade various Bitcoin chain split tokens, however as we explained some of these tokens have overlapping periods.
One of these tokens, Bitcoin Cash BCH , launched in August , we discussed this token in our earlier piece on the subject. The launch of Bitcoin Cash occurred during the Bitcoin Unlimited futures contract period.
CSTs with overlapping contract periods and other forking events may need to be adjusted to reflect the correct economics. We have a plan for this and may not be able to implement it immediately, but it is fair to our users and will be applied retroactively in a non-intrusive way. More details will follow on this next week. Due to the recent price rally in Bitcoin Cash, with it currently trading at around 0.