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2/ This means that crypto is moving in and fiat is moving out, thus the net BTC inflows. Note that selling BTC/USDT does *not* explain this. (a) you would likely just see USDT crypto outflows; (b) the BTC/USDT arb is generally kept in line between BFX and other exchanges.

SBF

@SBF_FTX

Jan 2, 2020

3/ So that's most of the story. But we're missing the character development. I started at (b). What's (a)?

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and

okay sam -- got a theory. would love to hear your thoughts. paolo may be right that premium is a potential indicator of whale net positions. Finex was bearish @ 20k top range, bullish @ 'crypto winter' phase, bearish after (by comparison), gradually bullish as we've broken down.

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and

this would mean premium is caused by whales accumulating longs & seems to counter-trade price action which you'd expect of whales. i don't buy the arb argument. finex has had ~$50m avg. 1d vol. past 30d. $300m surplus of inflow:outflow over same period (+$10m surplus / day)

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and

with that kind of volume, i believe the arb would have been eaten up by now. also -- if the argument is arb is maintained and exploited by the same parties... that further casts doubt as there isn't enough meat on the bone with current volume to run an op like that imo.

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and

arb is possible but it needs backchannels for instant deposit to instantly sell and utilize the arb in real time, or a huge stash already on both exchanges -- but if it's a huge stash already there, that destroys disproportionate inflow narrative.

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and

so i think the premium is mostly the simplest explanation -- finex is more bullish than the market. and historically they seem pretty good at countertrading the market.

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Yup I think this is basically right! But also could be more specific, and there are other pieces to this too. Why would a directional whale historically use BFX? And who, exactly, are 'the whales'?