BitMEX Stellar Giveaway leaderboard 25 January 2018

Check your user name here:
https://www.bitmex.com/app/leaderboard

Or follow these steps:

  1. Go to the BitMEX platform.
  2. Click on Contracts from top menu bar.
  3. Click on Leaderboard from left navigation bar.

As a reminder, 15 randomly selected Stellar contract traders will be rewarded one of the 15 prizes:

1 Grand Prize of 25,000 USD
1 Second Prize of 10,000 USD
13 Third Prizes of 5,000 USD

Good luck to all participants!

Cheers,
The BitMEX Team

BitMEX Stellar Giveaway leaderboard 24 January 2018

Check your user name here:
https://www.bitmex.com/app/leaderboard

Or follow these steps:

  1. Go to the BitMEX platform.
  2. Click on Contracts from top menu bar.
  3. Click on Leaderboard from left navigation bar.

As a reminder, 15 randomly selected Stellar contract traders will be rewarded one of the 15 prizes:

1 Grand Prize of 25,000 USD
1 Second Prize of 10,000 USD
13 Third Prizes of 5,000 USD

Good luck to all participants!

Cheers,
The BitMEX Team

BitMEX Stellar Giveaway leaderboard 23 January 2018

Check your user name here:
https://www.bitmex.com/app/leaderboard

Or follow these steps:

  1. Go to the BitMEX platform.
  2. Click on Contracts from top menu bar.
  3. Click on Leaderboard from left navigation bar.

As a reminder, 15 randomly selected Stellar contract traders will be rewarded one of the 15 prizes:

1 Grand Prize of 25,000 USD
1 Second Prize of 10,000 USD
13 Third Prizes of 5,000 USD

Good luck to all participants!

Cheers,
The BitMEX Team

Bitcoin ain’t a stock

The most common criticism of Bitcoin is that it has no intrinsic value. That is entirely true, but neither does the US dollar or a bar of gold. These same critics then begin to buttress their argument by comparing Bitcoin’s market cap against the equity value of some large blue-chip companies. Surely Bitcoin is in a bubble if it is worth $250 billion and company X is worth slightly less.

A share of stock in a company is the net present value of all future dividends, which implies that stocks have intrinsic value. It is intellectually lazy to compare Bitcoin, which possesses no income stream, against a stock that does.

This leads me to believe that most financial journalists do not fundamentally understand any of the financial assets they write about daily. The mischaracterisation of Bitcoin and its value proposition further illustrates their ignorance.

The second facet of Bitcoin in the market that pains me is that many people don’t understand exchange rates. If Bitcoin has no intrinsic value, its value comes from the market’s perception of its moneyness — which means that Bitcoin has a price only versus another asset, crypto coin, or fiat currency. Therefore, either Bitcoin can be in a bubble now or the asset it is valued against was previously.

Take the above weekly log graph of the Bitstamp USD/Bitcoin price since 2012. Viewing this chart would lead you to believe that the dollar was in a bubble, which then burst. Hard-money folks have been labelled modern-day Cassandras because the hyperinflationary fiat doomsday collapse has yet to manifest itself. The inflation, which government statistics expertly conceal, rears its ugly head through crypto-coin pumps and Hong Kong cage homes worth millions of USD.

My pet peeves do not prove that Bitcoin deserves its current market-clearing price against fiat currencies. Rather, if one wants to dismiss Bitcoin as a fad for the young’uns and financially stupid, the arguments used must make financial sense.

BTFD!

January historically has been a great month to pick up cheap Bitcoin. Over the past five years, Bitcoin has turned bearish during this month and has, eventually, recovered from its drop (although it took a little longer in 2014 and 2015).

Creative traders who believe that Bitcoin will indeed again recover from this current market slump can look at ways to increase their alpha while holding Bitcoin using BitMEX products.

At the time of writing, XBTH18 and XBTM18 are trading at $100 and $800 premiums over a spot price of $10,950, which translate to 4.6% and 16.5% annualised premiums, respectively.

Historically, the basis on the fixed-date products trade on average around 25% to 30% annualised basis levels and thus these trades could be an extremely cheap way to pick up cheap Bitcoin.

For example, consider if the basis reverts back to its historical average immediately at the current price levels: we should see a premium on XBTH18 and XBTM18 of $640 and $1,450 respectively.

Hence, a trader looking to BTFD on Bitcoin, who believes that the basis should revert to its historical average, could then see additional gains of $540 to $650 on the fixed-date products. Happy trading!

XBT/USD curve structure

Due to the increased liquidity on BitMEX’s Bitcoin/USD contracts, a six-month fixed-date contract can finally be listed! This new contract is XBTM18, and it expires 29 June 2018. Now we have the beginnings of a Bitcoin/USD contract-interest-rate term structure. Valuable insights can be gleaned into the market’s perception of the future value of Bitcoin from the premium or discount of these contracts.

The above chart illustrates the annualised percentage premium of XBTH18 (March 2018) and XBTM18 (June 2018) on 4 January 2018 and 16 January 2018.

Looking at the 4 January observations, I am immediately struck by how flat the curve is. Given the explosive Bitcoin price volatility in December, I would expect XBTM18 to trade significantly lower or higher than XBTH18 in annualised percentage terms.

If we time-travel back to 4 January, I would advise one of two strategies:

Bullish: Sell XBTH18 vs. buy XBTM18

If you believe that the price of Bitcoin will rise, this is a price-neutral way to express that view. Why not just go naked long? If your prognosis is incorrect, your absolute losses will be much less using a 3m versus 6m basis trade.

If the spot price were to continue upwards over the next few weeks, XBTM18 would outperform XBTH18. That is due to traders purchasing the long end of the curve in anticipation of much higher prices come June. This outperformance manifests itself by the XBTM18 annualised premium rising much higher than XBTH18’s.

Bearish: Buy XBTH18 vs. sell XBTM18

If you believe the price of Bitcoin will fall, this is a price-neutral way to express that view. Again, in case you are wrong, you want to limit the absolute losses via a basis trade.

If the spot price were to continue downwards over the next few weeks, XBTM18 would underperform XBTH18. That is due to traders selling the long end of the curve in anticipation of much lower prices come June.

What actually happened

Spot prices fell, and the curve parallel-shifted lower. In addition, XBTM18 underperformed XBTH18 over the 12-day time period.

In annualised percentage terms on 4 January and 16 January, XBTM18 was 0.59% and 1.92% cheaper than XBTH18, respectively. The change in average spot price between both days was down 8.19%. The XBTM18 basis held up quite well, all things considered.

That indicates that there is a strong bid under XBTM18. The market does not expect the Bitcoin spot armageddon to continue into the summer. Or, said another way, hope springs eternal. And hope plus 100x leverage is a strong cocktail.

Trade idea: Sell XBTH18 vs. buy XBTM18

This bout of weaker prices allows an excellent entry point into this trade. If you believe the price will soon test $10,000 and maybe $8,000, wait for the dip. During the despair, traders will short the bottom and push the whole curve close to flat premium. If the market is super bearish, XBTM18 might even trade at a discount. Then you back up the truck, and go all in.

Otherwise, the current curve structure still affords an excellent entry point. My base case is that the curve will parallel-shift upwards to an annualised 40%, and XBTM18 will move to flat vs. XBTH18. In the bullish case, XBTM18’s premium will continue to outperform and hit 50% to 60% annualised.

Daily theta

Theta is the daily income earned or lost due to the passage of time:

theta = (outright % premium) / (days until expiry)

For the trade described above, you earn theta by being short XBTH18 and pay theta by being long XBTM18. This is because both contracts trade at a premium. Currently the net theta is +0.0053% per day. A positive theta means the trade pays for itself. Said another way, the trade has positive carry.

One caveat: your positive XBTH18 theta position evaporates in 73 days once it expires. The clock is ticking. The trade must move into your favour before XBTH18 expires. If you roll into another 3m versus 6m calendar spread in late March, the levels may not be attractive and/or you may lock in a loss.

Ode to speculators

As a good friend of mine says, “Everyone hates bankers until it’s time to pay the bill.”

The same can be said for crypto speculators. The common rejoinder amongst those who wish they were crypto rich, but who are too scared or lazy to jump in, is that crypto won’t last because the only use case is speculation.

It is true that the number-one use case for crypto is speculation. However, without these unwashed speculators, would anyone outside of a few technologists really care a fig about this industry?

Building infrastructure

What makes a coin valuable? At a fundamental level, most coins need some sort of usage. A coin with a dedicated community is able to attract users and talented developers to improve the protocol. The technology ideally will be useful, but that depends on the quality of work produced.

But if you are a developer, how do you decide which project to devote your time to? If you are a user, how do you first hear about a new coin or project?

Forums, IRC, Twitter, and eventually traditional technology-focused media outlets are the first to pick up on new trends. It is difficult to find a worthy project while wading through the Internet sewer of questionable content. The eureka moment occurs not when just one person discovers something new and useful, but when a group of like-minded folks are moving in the same direction on the path to enlightenment.

That is the slow approach. The faster and more popular approach is to use some objective measure to determine whether a group of people believe in a new coin or project a priori. The best objective measure is a market-determined price. One of the best facets of this industry is that most projects possess a tradable asset. The price, traded volume, and market cap reflect the market’s judgement of the value of a project.

When a price goes up and to the right, that validates those already working on the project. It also creates a desire for others to join the revolution for fear of missing out. This positive feedback loop lays a solid foundation for a project to scale and possibly realise its vision.

Fake news

Think back to how you first heard about Bitcoin. For me, it was a Zero Hedge article about how the price had shot up, to a then all-time high of $250 in April 2013. The sharp price rise intrigued me and prompted my further investigation. Only then did I read Satoshi’s white paper and become a believer.

I imagine that most readers have a similar story. The mainstream media’s most popular stories usually deal with someone making a lot of money in a short period of time. In our hyper-competitive and fast-paced world, everyone is trying to spot the next thing. They too want to discover the next Netscape, Google, Amazon, and Facebook. You too can sell books, give TED talks, go to Burning Man, and wear a puffy vest that shows off your mega biceps in your 50s.

Most people learned about Bitcoin through the media. Back in 2013, any major news outlet writing a story about Bitcoin could send the price up or down, depending on the content. Developers and punters use media outlets to determine what new skills to learn, and which new assets to HODL.

The media needs a constant stream of volatility for them to continue to write about an asset class. That is why you rarely see articles about the intricacies of the bond markets. It is boring because the volatility is low. Equities, however, are sexy. They have stories, and their prices at times move violently on new developments.

The media now loves crypto because the coins move. There is a constant flow of news. There are outrageous personalities who lead projects and own large stashes of coins. The crypto industry appeals to the emotions and greed of the public, and a new euphoria is palpable — a euphoria that central banks and regulators destroyed in the traditional asset markets.

Ode to speculators

Developers, users, and investors all depend on a horde of uncouth speculators to create a liquid market for crypto coins. I say uncouth, because many financial outlets regard retail investors as stupid. Retail investors don’t work at white-shoe investment banks, wear formal business costume, or read The Economist for pleasure on the weekend. Yet, the craze is led by these hooligans.

A new class of millionaires and billionaires were created from a stock of undesirables. The memes, language, and behaviour of many of the leading figures have no place at large banks and technology firms. But these people speculated that crypto could change the world.

Of course, the financial media and vaunted figures such as Jamie Dimon would pooh-pooh crypto as a cesspool filled with retail speculators. It would be unimaginable for them to endorse a market they don’t understand. However, there is also a disturbing trend of disdain toward said speculators even among even those who grew famous within the industry because they contributed to an asset class that has grown by hundreds of billions of dollars in one year.

Rather than complaining about the wild gyrations of the crypto markets, a more appropriate response is to express gratitude that crypto isn’t as boring as the S&P 500.

But what are they used for?

Bitcoin is the most mature crypto coin, and it is less than a decade old. Many of the coins that people love to hate are less than one year old. In another decade, it might be appropriate to ask, “Where’s the beef?”

Right now as a trader or HODLer. you want as much volatility as possible. That drives more smart engineers into the industry, more users to interact with the technology, more crypto media articles, and liquidity from new retail punters.

BitMEX Stellar Giveaway leaderboard 18 January 2018

Check your username here:
https://www.bitmex.com/app/leaderboard

Or follow these steps:

  1. Go to the BitMEX platform.
  2. Click on Contracts in the top menu bar.
  3. Click on Leaderboard from the left navigation bar.

As a reminder, 15 randomly selected Stellar contract traders will be rewarded one of the 15 prizes:

1 Grand Prize of $25,000 US
1 Second Prize of $10,000 US
13 Third Prize of $5,000 US

Good luck to all participants!

Cheers,
The BitMEX Team

ADA New Year Giveaway has concluded

Thanks to all of the participants for helping to make the contest a success, and congratulations to all the winners! Winners, please see the email you received for prize details.

The fight for the grand prize was fierce, with Razor-Cloud-Face and Mint-Flint-Spear battling it out to the last hours of the competition. In the end, Razor-Cloud-Face was able to maintain the lead and cross the finish line first by a small margin.

The second place winner was a dark horse, coming from nowhere near the end of the competition to dominate on profit by a healthy margin. Hats off to Solstice-Destiny-Salmon for taking us by surprise.

Finally, the five lucky $5,000 winners were selected randomly from all contestants, and their trading volumes ranged as low as .01 XBT. Any trader, big or small, can win the lucky draw, so make sure your name is in the hat for the next one.

If you didn’t get one of the lucky prizes, don’t worry — you have an even better chance with 15 randomly awarded prizes on our new Stellar Giveaway. This time, one lucky winner will receive $25,000! Learn more.

Wishing you a prosperous 2018.

Cheers!
The BitMEX team

 

 

 

BitMEX $100K Giveaway leaderboard 14 January 2018

Check your user name here:
https://www.bitmex.com/app/leaderboard

Or follow these steps:

  1. Go to the BitMEX platform at https://www.bitmex.com/app/trade/XBTUSD.
  2. Click on Contracts in the top menu bar.
  3. Click on Leaderboard in the left navigation bar.

Remember, five random ADA contract traders will be awarded $5,000 each.

Good luck to all participants!

Cheers,
The BitMEX Team

BitMEX $100K Giveaway leaderboard 13 January 2018

Check your user name here:
https://www.bitmex.com/app/leaderboard

Or follow these steps:

  1. Go to the BitMEX platform at https://www.bitmex.com/app/trade/XBTUSD.
  2. Click on Contracts in the top menu bar.
  3. Click on Leaderboard in the left navigation bar.

Remember, five random ADA contract traders will be awarded $5,000 each.

Good luck to all participants!

Cheers,
The BitMEX Team