Thoughts on this Crypto-currency strategy?

Discussion in 'Cryptocurrencies' started by Saltynuts, Mar 7, 2018.

  1. Go SHORT Bitcoin.

    Go LONG an equivalent value of other populer cryptocurrencies - Bitcoin cash, etherium, ripple etc.

    The idea is that there is no reason why Bitcoin should have an aggregate market value that is so much higher than the other cryptos - it was the first, but who cares, many of the other later ones are better. Bitcoin being #1 is just a BS holdover from it being the first.

    Thoughts?

    Thanks!
     
  2. Ayn Rand

    Ayn Rand

    Bitcoin - No one, and I mean no one understands Bitcoin. It is like everyone is on crack or meth or glue.

    Big thing to appreciate is no computer - no bitcoin. It is not an end of the world currency.

    How, why, where, when, - blows my mine.

    How can a unit that is limited be a currency? Unknown.

    Play have fun. There is no logic here so ...
     
  3. JackRab

    JackRab

    brilliant strategy... I wonder what can go wrong..

    O that's right... a short squeeze
     
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  4. Thanks Ayn. We are thinking the same I think. Bitcoin having the value it does is NUTS. But when will it come back to reality? And will its valuation get even NUTTIER in the meantime? Its just such a bizarre thing.
     

  5. Jack, thanks, glad you like my strategy. Question for you - what is a short squeeze? It sounds like something I might have to be worried about if I'm shorting bitcoin. Thanks!
     
  6. JackRab

    JackRab

    It's when you run into capital issues due to the fact that you would be leveraged short and therefore need to maintain a certain level of margin. Which in the case of bitcoin would be a decent sum...

    Would be less of an issue I guess when you would hold the long coins in the same account. But shorting bitcoin seems to be quite difficult and you would be limited to certain exchanges, am I correct?

    So, depending on how much capital you would want (or have) to put up to short bitcoin... short squeeze is something you should worry about.

    And I know you're trying to bait me into me saying bitcoin can go up and then you would reply, "but you're a skeptic who doesn't believe in it"... and then I would reply..." I am! "And then you would say... "JR, you can't have it both.. either long or short!" And then I would say: "I'm just more aware of the risks... "
     
    Last edited: Mar 7, 2018
  7. Jack, thanks a ton. No no, not baiting at all. Just trying to make some $$$ in this nutty crypto stuff.

    Definately would hold the long coins in the same account.

    So let's say I'm convinced, 100% convinced, and my conviction is accurate, that my mix of "non-bitcoin" coins will go up at least as much as bitcoin. Would that totally overcome the short squeeze risk you are describing?

    Thanks!
     
  8. JackRab

    JackRab

    Hmm... through which exchange can you short bitcoin? And you can hold other coins long on the same account?

    It will depend on how the margin is settled. If you would be short the actual BTC vs long the actual Altcoins, so no derivative... Then it might mean you need USD in account for initial and maintenance margin. At least some level of USD would make sense, since if the spread goes sideways... that would mean you're losing margin capability since the margin securities (altcoins) are losing value. And you need more margin to maintain the BTC short... No exchange in their right mind will want to cover that risk without proper cash.

    So my guess is that you need hard cash/USD to do that.

    But yes...theoretically, if the spread stays equal or better, and the exchange is fine with you posting the margin in altcoins... you're good to go. But a short squeeze is usually very hectic and I doubt they will be fine with this. And we're talking about the King of Hectic Moves... and you will be losing at one point in time... that's where that short squeeze will happen.

    And to be clear, I'm not talking about a market-wide squeeze... I'm talking about you being squeezed.
     
  9. This is your queue to doubt your conviction. Confidence should scare you because it undermines a cold rational view of the market.

    No matter how convinced you are, the market is mired in reality.
     
  10. A basic investment strategy can be phrased as “buy the dips.”
     
    #10     Mar 8, 2018
    DaveP648 likes this.