Wednesday, September 22, 2021

NFT Art #1: Spot v Futures Trading

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Altcoin Author
Blockchain Engineer. dApp/DeFi enthusiast.

Hey guys, it’s Rob. I thought about doing a little series where I show you the NFT. Discuss what my artist’s interpretation is when I crafted it. And then hopefully some takeaways are more meaningful than just reading some texts on a medium or trying to fast forward through a 25 minute YouTube video.

That’s teasing you to, you know, stay through the ads or clicking through on a podcast. I think it’s a meaningful learning exercise to be able to look to an image and then say, okay, My immediate takeaway is this. And now that I have the artist’s interpretation of it, my takeaway is this. And it’s also a good tool to be able to communicate sometimes difficult concepts in a meaningful way, in a simple way.

So I really think that there was a reason why the meme economy does so well. And there’s so many fans of memes. And so many communities are just built around means, you know, means as a currency, essentially, you know, they say like, mean stocks and, you know, these mean crypto tokens. The real visibility is the credibility, which is an old PR adage that I go back to all the time.

But in this first one, we’re looking at the difference between spot traders and futures traders. So we have the guy that’s futures, traders, and this was deployed on the day that everything went down like 30%, some stuff in half. And we’re saw some incredible volatility, especially. For some of the high flyers, like MacD, you know, went down to 80 cents, doubled a few hours after that.

So it’s been a crazy week vol and, um, after the huge sell off that I think was a reaction to the increased. Restrictions against Chinese group, no companies and people have a short memory, but this has been done many times before. A lot of people are saying that this is different, but each time it’s different.

So here you see the guy punching his laptop because he got wrecked. He had his position closed out. And he lost all of his investments. Sometimes they even will take a few dollars more if there’s a big spread or people are trading the calendars, you know? So like the Christmas Ethereum, as opposed to the perpetual, which is the, you know, you’re paying an hourly funding fee in order to take, get that leverage.

So it just, so the guy that’s, he’s frustrated because he leveraged up very often. He’s letting his gains. Continue to grow. And that’s a smart way to do it. Assuming that you have some sort of market stop or way to have it readjust, as you know, crypto goes up because it’s, you want to lock in those gains in as least aggressively a way that you can, but still you don’t want to be left completely wrecked at the end of the process
That’s not a good feeling. So this guy’s frustrated because he. Probably in my narrative leveled up to 101 X on FTX. And he was looking at voluntary bands, all the technicals, and he watched a few YouTube videos on how the standard, you know, moving lines are indicative of some price movements sometimes.

And a lot of people are very confident. That’s something’s going to happen with a little bit of information, not understanding that that information is available to everyone and the smart money that you’re trading against. Like they learn that they, one of their trading education and they’re five to 10 years in.

So there’s a lot of hubris when it comes to getting a little bit of knowledge and thinking that, you know, a lot, but not recognizing that, unless you have some sort of freezy insider information you’re operating with everyone else. Who’s a lot of times. No very smart, but also, yeah, bipolar. So when people go up, it goes up quickly and when it goes down, it goes down quickly.

I saw some stat like over the last number of decades, if you concentrated those CDs, like 45, most active days, you amount to the vast majority of the 80 20, all the gains of the S and P 500. So a lot of these herd movements happen at all at once. And the same thing goes on steroids for crypto. So this guy is frustrated because he probably took a lot of the gains that he’s been getting that pushed the run-up to 2.5 trillion for the market cap of collective Bitcoins plus alt coin.
And then now he’s got nothing. So he’s frustrated. So he’s like what’s another thousand dollars. In terms of a laptop is going to smash this bad boy, and I’m out, I’m gonna go play some golf or something. And then the spot traders, this is like a sophisticate, a guy that’s he’s wealthy, but he is wealthy because.

You understand that it’s not the way you trade? No, sorry. It’s not what you trade, but it’s the way you trade. So with spot, they’re not very leveraged, but you can still do a lot with it. Most often you’re either thinking is a spot position. So you’re leveraging against us dollars or Bitcoin. And when you do that almost a hundred percent of the time, you’re borrowing the crypto for cheaper.

And I’ll half of the big ones you can borrow for less than 1%, as opposed to, if you go by the funding rates for a lot of the cryptos, you’re starting at 12% and then you’re going all the way up to 60%, 80%. So you’re paying a lot more. And then also keep in mind that these spot [00:06:00] traders aren’t really paying any fees other than small orders.
To get into it, just nominal fees, the lowest fees that you’ll see on an exchange, as opposed to futures traders, you know, they’re, they can get 0.03% on a position. And the reason that’s done is because people, when there’s not as much understanding or not as much capital, there’s not as much pushback on.
Uh, the fee side of things. So exchanges are smart and they know that someone has a hundred dollars in Bitcoin and they want to pump it to 10,000 in value and they don’t care and they expect to get wrecked. And so when they do, you know, they’re frustrated, but the fact that they were also, you also had to eat, you know, $20 worth of fees on getting in and then, you know, even more on getting out the exchange.

Essentially got almost the entirety of that a hundred dollars. So they’re doing insanely well. And that’s why, you know, I’m bullish on exchanges during these crash crews, because all those forced liquidations come in enormous fees that are beneficial to the exchanges. You know, a lot of times the valuations are high, so they may not necessarily go up right away.
But I know like FTX has buyback periods, which are usually on Monday. And I think it’s like either noon or midnight Hong Kong time. And there’s all sorts of ways to, you know, time, the token buyback or burn. But at the same time, everyone knows about those. Those are known things and they’re factored into a lot of smart money, people that are coming in as whales.

So. You know, in my narrative, this guy has a few Bitcoin that he has had, which against the dollar, but he also has some three X tokens. So, you know, when it goes down, then he loses a little bit on the actual Bitcoin, but he’ll make it back on the increase in value on the bear tokens, which are, you know, three X leveraged and you know, those themselves, the leverage tokens are.

Spot, you know, there are three X spot and then they fluctuate as the day goes on because it’s a basket of usually dollars. And then the actual crypto and it readjusts every 24 hours. So this guy’s, you know, he’s sipping his coffee. Don’t know if the Irish coffee or normal coffee or, but he’s in this comfortable chair and he’s letting the volatility, the market work to his benefit.

A lot of these guys will be hedged and we’ll take advantage of the highest funding rate possible. And we’ll be even milking for that. You know, there’ll be getting coins that are the demand for them is insane. And they’ll be short in that position. Just like some people will buy GME game stop, and then they will, um, put it into exchange accounts, like interactive brokers where you can get back some of that margin interest.

And a lot of exchanges won’t share any of that, like Robin hood and on they’re clearing well over a billion on the stocks that are in there, and that’s a hugely profitable model. You can, that’s why the push to have zero fee transactions on a lot of stock trades has done so well because. The fees on the short positions, if you push people in the direction of speculative stocks or commodities, but usually stocks and they’re actively lending them out because they’re in a margin account, you can make an enormous amount of money and exchanges certainly do at least a huge valuations in a short period of time with just a simple app or user interface that can be easily duplicated.

And there’s just a little bit of PR. And bots that create the narrative out there. And then anyone who criticizes sentenced cease and desist, which has been the pattern for a few broker dealers that I’ve seen out there pretty visible these days. So in my narrative, the takeaway is that if you can, I know it’s less sexy, but try to trade spot.
There are ways that you can do it that are strategic. I’ll take longer if you’re in the right direction on the market. But at the same time, you’re going to lose significantly less. And it’s just a smarter way that bigger traders play. And then they level up their earnings. And then before, you know, it become whales and then they get to the position where they wanted to get to by being a futures trader, but are doing it in much more of a calculated way and much more of a savvy way.

That is the opposite of the herd was just going a hundred X long. And then cross your fingers, hope and pray. So feel free to subscribe to my channel. If you enjoy this NFT or commentary, I’ll be doing some airdrops. So feel free to put in your xDAI address or really any of your, uh, theory of virtual machine addresses.

It’s the same for whether you’re on harmony one, BSC, Ethereum main net, xDAI, or polygon. So you just put it in there and I have some airdrops coming up. So, um, thanks for checking out the channel and giving me a little bit of a thumbs up and like follow me on @REKT on Twitter.

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