Trader Made 295% on Cryptocurrency Derivatives(bloomberg.com)
bloomberg.com
Trader Made 295% on Cryptocurrency Derivatives
https://www.bloomberg.com/news/articles/2017-09-27/cryptocurrency-derivatives-you-bet-this-trader-has-295-return
28 comments
He probably did as well as he could given his risk preferences and overall level of, uh, insanity, for the lack of a better word. By "insanity" I mean that which allows a person to do something like always doubling down on successful investments, risk of ruin be damned. It's a sure way to get absurdly rich if you don't end up losing everything you have along the way.
Yep, these articles always suffer from survivor bias. You never see the people who lost it all.
If you don't trade cryptos it looks really nice, but if you trade cryptos, then yes it did not do that great compared to the overall market. I have done over 600% in the past year, but I know plenty of people who are in the negative because they bought high and sold low. In the end, anyone who can make 295% return and have 9000+ investors following them is going to be just fine.
You're both in the business of making money. If buy and hold is more effective than trading, the trader is losing. Fairly relevant:
https://www.aei.org/publication/warren-buffett-wins-1m-bet-m...
https://www.aei.org/publication/warren-buffett-wins-1m-bet-m...
Yes. The price of Bitcoin was ~$600 12 months ago, ~990$ Jan 1st and it's now ~4080$. Trading should be compared against simply holding, otherwise what's the point?
You want to compare it against holding through market fluctuations. Sure holding would have been better this year. Should bitcoin crash next year, it will be interesting to see if he is still in profit or not when the person holding is down. I assume this is why he is currently not up against holding, because he has spread his risk to accommodate any crashes.
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Only 295% in a year? Not that spectacular in the current market.
I got 500% in a few months. Clear sign of a bubble, high risk high reward
> Clear sign of a bubble,
Was it also a bubble when Bitcoin went from $10 to $100 in 3 months back in 2013?
Was it also a bubble when Bitcoin went from $10 to $100 in 3 months back in 2013?
But no one knows when and if the music will stop. I'm not a huge crypto bull, but if you count Bitcoin + Ethereum, you're "only" looking at $90bn in market cap. There are at least several clear use cases now, unlike several years ago when it was all talk about revolution / anarchy / we're taking the power back to the people -- that nonsense.
Let's assume the technology has some value and Bitcoin could become a store of value at some point. I don't know if it will, but let's make the assumption. Then $90bn is a pittance, in comparison to the value of the global equities and gold market.
Apple is an $800bn company. Visa is a $250bn company. Mastercard $150bn. Facebook $480bn. And so on.
Crypto could very well become a $1-3-5tn market (again, I have no idea whether this will happen, and most of these ICOs look like garbage, but if either Bitcoin managed to become a store of value or Ethereum achieves a fraction of what they're trying to do, both will be very valuable). And if institutional money at some point enters the space, that will be (very) positive for the value of these things.
But even IF it's a bubble: the .com bubble wiped away $1.9tn in value. Crypto is at $100bn at the moment. The main currencies (Bitcoin + Ethereum, which account for 75% of crypto value) might very well go 10-20x again before any major breakdown occurs.
I've been on the fence multiple times: it's a bubble, it's not a bubble, and frankly, I have no idea. But the potential might be there at least, so it's probably a good idea to at least own some. The potential downside is: you lose your money. But the upside is 10 to 20x, which seems pretty good.
Let's assume the technology has some value and Bitcoin could become a store of value at some point. I don't know if it will, but let's make the assumption. Then $90bn is a pittance, in comparison to the value of the global equities and gold market.
Apple is an $800bn company. Visa is a $250bn company. Mastercard $150bn. Facebook $480bn. And so on.
Crypto could very well become a $1-3-5tn market (again, I have no idea whether this will happen, and most of these ICOs look like garbage, but if either Bitcoin managed to become a store of value or Ethereum achieves a fraction of what they're trying to do, both will be very valuable). And if institutional money at some point enters the space, that will be (very) positive for the value of these things.
But even IF it's a bubble: the .com bubble wiped away $1.9tn in value. Crypto is at $100bn at the moment. The main currencies (Bitcoin + Ethereum, which account for 75% of crypto value) might very well go 10-20x again before any major breakdown occurs.
I've been on the fence multiple times: it's a bubble, it's not a bubble, and frankly, I have no idea. But the potential might be there at least, so it's probably a good idea to at least own some. The potential downside is: you lose your money. But the upside is 10 to 20x, which seems pretty good.
>There are at least several clear use cases now, unlike several years ago [...]
What would you say are these use cases? From where I stand the use cases of bitcoins are pretty much the same they were a few years ago, only the volume increased. It's a lot of speculation, some black market purchases and some donations. A few shops accept bitcoin but it's still pretty niche, and most of them convert into fiat immediately anyway.
Arguably there are even fewer use cases than a few years ago because of the prohibitive cost of the transactions, you can't move money around for cheap like you used to (that might change in the near future with segwit, we'll see). It's simply not cost-effective to use bitcoin for small transactions anymore, at least if you want to be reasonably sure it'll be confirmed in a short amount of time during the busy time of the week.
What would you say are these use cases? From where I stand the use cases of bitcoins are pretty much the same they were a few years ago, only the volume increased. It's a lot of speculation, some black market purchases and some donations. A few shops accept bitcoin but it's still pretty niche, and most of them convert into fiat immediately anyway.
Arguably there are even fewer use cases than a few years ago because of the prohibitive cost of the transactions, you can't move money around for cheap like you used to (that might change in the near future with segwit, we'll see). It's simply not cost-effective to use bitcoin for small transactions anymore, at least if you want to be reasonably sure it'll be confirmed in a short amount of time during the busy time of the week.
The only use case of Bitcoin (I think) will be store of value. Digital gold essentially. Ethereum seems more interesting and versatile.
I'm not big on gold either, but like Bitcoin it has limited use cases aside from embedding tiny amounts into electronics and jewellery.
Speculation, probably. Alternatively, the returns could be due to the uncertainty: will it or will it not become a store of value. You're essentially getting compensated for not knowing and for the risk you're taking.
If you look at Microsoft, when it IPOed, it was worth $750M. Now it's worth $550bn. Companies IPO a lot later now, so unless you're seed investing, you can't get those returns by investing in the public markets. With Bitcoin, it essentially started from zero, hence the crazy returns.
Having something that is safe “outside of the system" is also pretty good. I know for a fact, if the Bitcoin price would be relatively stable (or comparable to normal gold) and it would serve as a store of value, I would rather own Bitcoin because it is 1) more convenient to move around (in comparison to gold bars, or no fees in comparison to an ETF), and 2) more safe from confiscation. And I say that without trying to sound like a conspiracy nut.
I'm not big on gold either, but like Bitcoin it has limited use cases aside from embedding tiny amounts into electronics and jewellery.
Speculation, probably. Alternatively, the returns could be due to the uncertainty: will it or will it not become a store of value. You're essentially getting compensated for not knowing and for the risk you're taking.
If you look at Microsoft, when it IPOed, it was worth $750M. Now it's worth $550bn. Companies IPO a lot later now, so unless you're seed investing, you can't get those returns by investing in the public markets. With Bitcoin, it essentially started from zero, hence the crazy returns.
Having something that is safe “outside of the system" is also pretty good. I know for a fact, if the Bitcoin price would be relatively stable (or comparable to normal gold) and it would serve as a store of value, I would rather own Bitcoin because it is 1) more convenient to move around (in comparison to gold bars, or no fees in comparison to an ETF), and 2) more safe from confiscation. And I say that without trying to sound like a conspiracy nut.
I'm inclined to agree, though for no particular rational reason. I've thought long and hard about it, and I can't think of any particular reason the bottom should fall out short of widespread state intervention.
> His portfolio is up 295 percent in the past 12 months.
The coins on Coinbase alone (BTC, ETH, LTC) are up 600%, 2200%, and 1300%, respectively. Many altcoins have done several times better.
The coins on Coinbase alone (BTC, ETH, LTC) are up 600%, 2200%, and 1300%, respectively. Many altcoins have done several times better.
Probably a naive question, but I wonder if money in and out of bitcoin could be regulated by the governments in the future as “gambling” income or loss?
Since I hardly hear anybody use bitcoin or *coin as cash rather than just speculating that the value will go up...
Gains are generally seen as investment income, and taxed as capital gains (depends on the country however)
If you're comparing his returns with your own, take into consideration risk-adjusted returns. Traders try to avoid massive downside risk, and the best ones structure trades where they stand to lose very little in most outcomes.
Is it an article? I think I just read a very lengthy eToro ad.
Yeah, your portfolio is up now, but when the crash inevitably comes, how are you going to get that money out?
any of the many exchanges where you can convert coins to fiat?
During high volume in the past Coinbase has suspended withdrawals of Ether. Call it a glitch, scaling issue, or whatever but it's still a valid concern.
"whatever" - market manipulation?
I think on more than one occasion, Coinbase, and other exchanges have been guilty of having outages/ suspending withdrawals etc during crashes... never seems to happen during upswings, though...
I think on more than one occasion, Coinbase, and other exchanges have been guilty of having outages/ suspending withdrawals etc during crashes... never seems to happen during upswings, though...
That is a serious accusation. They have had outages during peak traffic.
I saw it happen during dips (but not spikes!) on Coinbase three times in two months.
I'm not buying that it's a scaling issue personally.
I'm not buying that it's a scaling issue personally.
Even though it happened during peak usage it can't be a scaling issue?
Or to more solid coins.
Or to buy actual assets like real estate with them.
Or to buy actual assets like real estate with them.
Later, regarding the trader in question,
> His portfolio is up 295 percent in the past 12 months.
...am I interpreting the numbers wrong, or has he done significantly worse than the market here?