A bit more than a week later was May 19, a huge crypto sell off. My DOGE/USD future was auto-deleveraged to close out a levered long, leaving me naked long DOGE in a falling market. Not good!
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I was in a meeting when I was notified and it was half an hour before I could trade out of the spot position. I was incredibly lucky - my futures buy nearly bottom ticked the market at ~0.2 and I closed out the spot at ~0.31 for a +50% profit (about +3% of my total equity)pic.twitter.com/GYF1b4gkez
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I removed that the pnl from that trade from the chart above - here's what it looks like if I leave it in. Taking a ~6% basis position in a memecoin where I knew there was high risk of auto-deleveraging was a bit stupid, and I was lucky it worked outpic.twitter.com/XbzXkQ9dkV
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I made a bunch of other dumb mistakes too, like sizing the spot/futures legs incorrectly to begin with, occasionally trading the wrong contract and needing to trade out, and messing up a currency conversion once. Fortunately none of them cost me more than a few bps.
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By far the most time consuming thing was doing my pnl each day, so I'd definitely look for a way to automate that in the future. I also bought a subscription to Skew Analytics which was helpful, though probably not strictly necessary.
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Some other helpful resources - FTX Premiums https://ftxpremiums.com/ for tracking basis across multiple coins on FTX
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Binance Premiums https://binancepremiums.com/ (by
@robertmartin88, you should follow him) which was useful for tracking the same thing on Binance.1 reply 0 retweets 25 likesShow this thread -
Was also v helpful to discuss ideas and implementations with
@therobotjames@choffstein and @drewg__1 reply 0 retweets 18 likesShow this thread -
macrocephalopod Retweeted Joe Weisenthal
I've closed out all the positions now because basis came down to ~5% on most exchanges and I have better ways to use the cash - but nice to know that if the basis comes back again, I'm ready to get back into the Bitcoin free money tradehttps://twitter.com/thestalwart/status/1407410049874595840 …
macrocephalopod added,
Joe Weisenthal @TheStalwartThe Bitcoin free money trade is gone. No more profits in buying spot and shorting the futures. https://www.bloomberg.com/news/articles/2021-06-22/bitcoin-s-money-printing-machine-breaks-down-as-futures-collapse?sref=vuYGislZ … via@VildanaHajric and@kgreifeld pic.twitter.com/7gdFIbkuUHShow this thread4 replies 0 retweets 52 likesShow this thread -
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Replying to @sajidnizami
Kind of. You can deposit stablecoins with someone like BlockFi, who will pay you high rates because they are ultimately lending it to either leveraged longs or crypto hedge funds who are doing trades like this. Obviously it is not actually “free money” and there is risk!
12:48 PM - 1 Jul 2021
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