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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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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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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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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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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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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'?

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Does this work? Or still not specific enough?

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b.biddles

@thalamu_

Jan 7, 2020

Replying to @SBF_FTX @SBF_Alameda and @paoloardoino

okay so maybe this is crazy but -- > borrow on bfx > if you're whale, negotiate to split arb w/ bfx > lender gets their interest (cut of arb). > whale generates free USD > whale goes long with free USD > bfx premium simultaneously arbed and lifted by cycle

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That's definitely essentially part of it! I'd say there's one more connection, though, that people aren't generally making that seems probably relevant to me. (Well a few--but one large one.)

3:48 AM · Jan 7, 2020Twitter Web App

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🧐

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Tell me when I get warm... Something to do with steady stream of fees collected by exchanges in BTC having to liquidate for USD. And the length of time of decreased volume being reduction in outflow of USD from say BitMEX selling their fees for cash?

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Or is are there 2 entities in different tax jurisdictions exploiting different taxation calculation methods such as Average Cost Base or Adjusted Cost Base etc against each other to generate tax credits for themselves in their jurisdictions by reporting "technical losses".

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