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  1. style="height: 100%;margin: 0;padding: 0;width: 100%;-ms-text-size-adjust: 100%;-webkit-text-size-adjust: 100%;background-color: #FAFAFA;"> Enjoy the Latest Edition of Crypto Trader Digest - Certified Rare ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ A Message from Alexander Höptner, CEO of BitMEX Another week and another significant ‘first’ for BitMEX. This week we launched our exclusive NFT series as a reward for all BitMEX users. Our BitMEX Phoenix and ‘X’ Series NFTs were unveiled to the world, and we’ve already started gifting the ultra-rare Phoenix NFTs to our top 10 traders. Behind the excitement of this campaign is a serious point. The metaverse is here - so we’re going to use it to reward our users. Don’t miss your chance to bag one of only 150 of our ‘X’ Series - for details, see here. In this edition of Crypto Trader Digest, Arthur continues to delve into NFTs by taking a step back and looking at some of the longer-term macro trends that have driven today’s popular culture. He’ll examine how waves of urbanisation and industrialisation in the run up to the 20th Century acted as catalysts for the emergence of sports we know and love, how the growth of cities fueled the meatspace art-world, and how an internet-enabled digital economy has propelled the mass adoption of e-sports. So why wouldn’t digital art and NFTs play a huge part in the metaverse world that’s becoming our new normal? Which, as an avid gamer, got me thinking - how far away are we from my dream of having my favourite weapon from my favourite game slowly spinning in a digital frame on my wall at home? As ever, an insightful and thought-provoking read. - Alex (@AlexHoeptner) From the Desk of Arthur Hayes Certified Rare (Any views expressed in the below are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.) Digital artworks enabled with NFT technology and hosted on public blockchains, hereafter referred to as NFTs, beg the latest iteration of the question “what is art, and what is trash?” When the less affluent witness immense sums spent on squiggles on a canvas, or pixelated faces, they cry “what a waste”. When one affluent cohort witnesses another break ranks and support a new art form with their nouveaux riches, they wag their fingers at the upstarts and proclaim “they have no taste”. Because their idea of “taste” is underpinned by a hope that the new wealthy will continue to pump the art bags of the old wealthy, such that valuations continue rising. A few days ago, I showed my boy a few Rare Pepes that caught my eye. I wanted to ape into the Pepe’s due to some rumours that Sotherby’s was going to auction some certified Rare Pepe JPEGs. He responded that I should buy a piece from some famous contemporary artists I knew nothing about. My response was “I don’t buy Boomer art”. I will support my own, and the digital community that is the source of my ability to spend crypto on JPEGs. The combination of that conversation, my trip to the US Open, and a recent dinner party fully convinced me that the NFT art form is going to be enormous. Flipping JPEGs is profitable now for some, but if that is the only activity, at some point the speculating horde will move to better silicon-powered pastures. What narrative will convince the crypto wealthy to plow their disposable Sats and Wei into NFTs rather than Monets? Are crypto hodlers destined to pump the Boomer art bags, or will we two-step to our own beat? The City Powers the Art As an avid tennis fan since youth, I thoroughly enjoyed the experience of attending the most recent US Open. When you begin thinking deeply about any professional sport, you quickly realise it is a massive energy sink. Arthur Ashe Stadium can hold almost 24,000 humans. How does one get to the stadium? Most people get into a motor vehicle that requires energy to operate. And for the pleasure of riding in your own motor chariot you get to gaze upon glorious Queens for hours. Others ride the subway, which also consumes energy. The stadium consists of a concrete slab with lines on it where men and women hit green felt balls with a raquet. The viewing experience and the energy it costs to construct the venue is completely worthless from an energy perspective. However, what tennis and other professional sports provide is a sense of community that was destroyed when we moved from small villages as peasant / slave farmers into factories as atomised worker bees. Baseball is America’s sport. In 1871, the first professional league was founded. What would the UK be without football? I’m sure depending on your opinion of the sport, you might answer quite a bit better, or completely worthless. But after choking on penalty kicks in the 2021 Euros, I’m sure there were many who wished England would stop pretending to play the sport. The Football League, the first of its kind, was founded in 1888. By 1900, the percentage of citizens residing in cities with a population 5,000 or larger stood at 35.9% in the US, 67.4% in the UK, and 30.4% in Europe as a whole. Western Europe and America adopted and quickly improved upon the inventions of the first industrial revolution. Today, in most developed countries, over 80% of the population lives in cities of various sizes... Click here to continue reading this edition of Crypto Trader Digest – Arthur Hayes, Co-Founder of BitMEX (@CryptoHayes) From BitMEX Research Ethereum’s Proof of Stake System – Calculating Penalties & Rewards After launching our Ethereum Proof of Stake (PoS) validator node a few weeks ago, in our first detailed look at the PoS system, we catalog and examine each type of reward and penalty that validators can obtain. We provide examples for many of the scenarios based on the live system and comment on the interrelationship between some of these rewards and Ethereum’s supply. Mapping Out The Macro Endgame Following on from our February 2019 piece, “Anatomy Of The Next Global Financial Crisis” and our March 2020 piece “Inflation Is Coming”, we thought now might be an appropriate time for another opinion-filled macro rant. We explore the recent pick up in inflation to over 5% and discuss the increasingly fraught predicament central bankers face when trying to bring this under control. Latest News from BitMEX Are YGMI? Flex with BitMEX’s First Ever NFT Drop We’ve decided to launch our first-ever NFTs, giving BitMEX traders the chance to take home a piece of virtual swag. Think of it as a BitMEX badge of honour – no matter where you are in the metaverse, owning one of these will put you in the rarest of company. Introducing the Phoenix Series and ‘X’ Series. Social Spotlight View this email in your browser No articles in this email should be copied or reproduced in whole or in part. The information contained does not constitute research or a recommendation. Neither HDR Global Trading Limited nor any of its affiliates make any representation or warranty as to the accuracy or completeness of the statements or any information contained in these articles and any liability therefor (including in respect of direct, indirect or consequential loss or damage) is expressly disclaimed. This is not providing any financial, economic, legal, accounting or tax advice or recommendations. In addition, the receipt of this email is not to be taken as constituting the giving of investment advice nor to constitute such person a client of the BitMEX trading platform. This email was sent to <<Email Address>> why did I get this? unsubscribe from this list update subscription preferences BitMEX · Suite 202, 2nd Floor, Eden Plaza · Eden Island · Mahe · Seychelles @media only screen and (max-width: 480px){ table#canspamBar td{font-size:14px !important;} table#canspamBar td a{display:block !important; margin-top:10px !important;} }
  2. style="height: 100%;margin: 0;padding: 0;width: 100%;-ms-text-size-adjust: 100%;-webkit-text-size-adjust: 100%;background-color: #FAFAFA;"> Enjoy the Latest Edition of Crypto Trader Digest - JPEG The Jeweller ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ A Message from Alexander Höptner, CEO of BitMEX With the arrival of September comes that collective ‘back to school’ feeling in many places around the world. The fun-filled months of summer play havoc with financial markets, and although the concept of a silly season is largely irrelevant in 24/7/365 crypto markets, this year NFTs have brought fresh interest (and intrigue) in crypto-fuelled markets. CTD regulars hopefully enjoyed Arthur’s first piece on NFTs, where he examined the psychological underpinnings of the NFT craze. In his latest essay he opines on emerging trading strategies in this fascinating market. As he says, real traders will make a market out of anything - so it’s not too much of a stretch to envisage a burgeoning NFT derivatives market in the near-term. Something for the BitMEX product pipeline, perhaps? Whatever your take on NFTs, they are undeniably prompting us all to consider questions spanning philosophical, economical, and pure human psychology. - Alex (@AlexHoeptner) From the Desk of Arthur Hayes JPEG The Jeweller (Any views expressed in the below are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.) A real trader will make a market on anything. Story time. As many long-time readers know, I spent the summer of 2007 in the Deutsche Bank Hong Kong internship program. I rotated on the equity derivatives sales desk. It was an era before the trading floor got woke and banned such demeaning activities as interns getting breakfast and lunch for the desk. As an intern, your only worth was your ability to follow orders and get breakfast, lunch, and mid-afternoon snacks for the desk. In return, the professionals would answer your questions about their day jobs. 20 salespeople worked on the desk. Myself and another intern who I’m still besties with trekked our sorry, business casual-wearing asses in the humid and hot Hong Kong summer every day to procure sustenance for our masters. Every week, each salesperson would deposit money in the bank of Arthur, from which I would debit the cost of their food. I kept a pretty detailed spreadsheet of what each person ordered, the date, and the amount. That’s all pretty standard, but as an enterprising and broke intern, I endeavored to make a profit from my role as a food sherpa. I charged a pretty hefty spread on every order such that I made a few hundred dollars per week profit. Lest you think I acted out of line, everyone on the desk knew what I was doing, and tacitly approved. Game respects game. Last fortnight, I opined on the philosophical underpinnings of the NFT craze. This essay focuses on different, simple emerging trading strategies. Put aside the question of intrinsic normative value of NFTs, and appreciate that thousands of ETH and BTC change hands every month in the NFT markets. As crypto traders, we must participate, lest we leave money on the table. Similar to the story above, are you willing to use any opportunity to your benefit? While this won’t be an exhaustive deep dive into the microstructure of the NFT trading markets, hopefully this serves as a launch pad for more study of alpha-generating trading strategies. Click here to continue reading this edition of Crypto Trader Digest – Arthur Hayes, Co-Founder of BitMEX (@CryptoHayes) From BitMEX Research BitMEX Research Is Now An Ethereum Staker BitMEX Research is delighted to announce that as of 31 August 2021, we have become an active staker on the Ethereum Beacon chain (Eth 2.0). Our validator number is 222,424. Within a few hours we had already proposed our own block, slot 1,964,794 in Epoch 61,399. Latest News from BitMEX BitMEX Appoints Fernando Luis Vazquez Cao to its Board as a Non-Executive Director We’re delighted to announce the appointment of Fernando Luis Vazquez Cao as a Non-Executive Director with immediate effect. A 20-year veteran of the technology and financial services sectors in Asia Pacific, Fernando is currently CEO of digital asset powerhouse SBI Digital Asset Holdings. 100x Ventures Announces Second Tranche Investment in Aluna.Social We’re happy to announce that we’ve made a significant second tranche investment in Aluna.Social, deepening our commitment to its long-term growth. Aluna.Social is an up-and-coming social trading terminal that provides a unique, gamified copy-trading experience. Social Spotlight View this email in your browser No articles in this email should be copied or reproduced in whole or in part. The information contained does not constitute research or a recommendation. Neither HDR Global Trading Limited nor any of its affiliates make any representation or warranty as to the accuracy or completeness of the statements or any information contained in these articles and any liability therefor (including in respect of direct, indirect or consequential loss or damage) is expressly disclaimed. This is not providing any financial, economic, legal, accounting or tax advice or recommendations. In addition, the receipt of this email is not to be taken as constituting the giving of investment advice nor to constitute such person a client of the BitMEX trading platform. This email was sent to <<Email Address>> why did I get this? unsubscribe from this list update subscription preferences BitMEX · Suite 202, 2nd Floor, Eden Plaza · Eden Island · Mahe · Seychelles @media only screen and (max-width: 480px){ table#canspamBar td{font-size:14px !important;} table#canspamBar td a{display:block !important; margin-top:10px !important;} }
  3. style="height: 100%;margin: 0;padding: 0;width: 100%;-ms-text-size-adjust: 100%;-webkit-text-size-adjust: 100%;background-color: #FAFAFA;"> Enjoy the Latest Edition of Crypto Trader Digest - Rock, Paper, Scissors Says GO! ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ A Message from Alexander Höptner, CEO of BitMEX Markets are ultimately built on human psychology. Even the best technical analysis can’t fully account for momentum, fear, or greed. That’s at least part of the reason why the world’s premier investment firms were taken for a ride - however brief - by Reddit investors in the Gamestop/ AMC saga. In the crypto markets, we’ve seen a resurgence of the NFT craze, with Apes, Rocks, and CryptoPunks commanding eye-popping figures on online marketplaces. There’s been a fair amount of discussion and disdain about the frivolity of it all by people who prefer more traditional shows of wealth, privilege, and taste at the centuries-old auction houses or well-marketed fashion brands. But as Arthur points out in the latest Crypto Trader Digest, these outwardly frivolous pursuits are all underpinned by the same thing - the innate human urge to Flex. “Just because robots take all of our meatspace jobs doesn’t mean that humans stop being humans in the metaverse,” he concludes. When we accept this and leave our biases at the door, we allow ourselves to learn a little more about the coming metaverse. Pack your Balenciagas and png pet rocks and come along for the ride in this piece. We’ll all be better for it. - Alex (@AlexHoeptner) From the Desk of Arthur Hayes Rock, Paper, Scissors Says GO! (Any views expressed in the below are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.) Art is an expression of human civilisation’s energy abundance. When viewed in net energy terms, it is completely worthless. But when viewed as the purest expression of humanity beyond our basic functions of consuming calories, reproducing, and perishing, it is priceless. We “work” to enjoy leisure, and leisure is a personal pursuit that usually involves some art form. That encompasses music, film, paintings, sculptures, sports etc. All of these activities are energy sinks, but bring endless pleasure to the participant and the spectator. The advent of super-intelligent networked thinking machines will herald an era where the vast majority of humans’ labour is economically worthless. Freed from the physical constraints of work, humans will turn to their new digital worlds and the complete expression of civilisation’s creativity and vitality. The metaverse is the future. What, then, of the concept of “art” in a purely digital construct? How will money, which is just an energy abstraction, be “wasted” on the pursuit of digital art? Are NFT-based art forms both worthless and priceless at the same time, similar to all other “traditional” forms of art? NFT-permissioned art is completely worthless from an energy standpoint, but it will represent the ultimate way to Flex social standing in a purely digital world. While it seems silly to those who think Art Basel and The Venice Biennale are the epitome of gatherings of like-minded cultured individuals, infinitely replicable JPEGs traded on the blockchain are no sillier than squiggles on a piece of canvas. You Are Worthless Compared with a self-learning intelligent machine, the vast majority of human labour is not worth the energy inputs it takes to sustain it. Regardless of how “smart” or “creative” you think you are, a machine will be better than you over the next few decades. What to do now? Old people will play physical sports, hang out on the beach, go to physical nightclubs, etc. once we tire of COVID lockdowns. (By old I mean millennials and older.) Young people will play video games and create entire new worlds inside various digital metaverses. The COVID shock just accelerated these trends. Now a large percentage of the world is locked in their dwelling; their only means of interaction is through internet-connected machines. Whether you like it or not, your online avatar will only grow in importance. The metaverse is now, and you are participating in its creation. The metaverse will be anything the human mind can dream up and it won’t be held back by the traditional physical laws we take for granted in meatspace. Entire new economies and occupations we cannot imagine will come to be in these worlds. Hopefully these jobs create the same sort of self-satisfaction as traditional employment such that the population feels content with their lot in life. The alternative is billions of restless souls that will lash out at perceived and real inequalities especially as capital is further concentrated amongst our tech overlords... Click here to continue reading this edition of Crypto Trader Digest – Arthur Hayes, Co-Founder of BitMEX (@CryptoHayes) From BitMEX Research The Blocksize War - Chapter 21 In the final chapter of The Blocksize War, we conclude the retelling of this important saga. Over the two-year battle, we saw small blockers go head-to-head with their large blocker adversaries in what has proven to be one of the most unforgettable events in Bitcoin’s history. Read on to learn more about the result. The full book is available on Amazon. Half of any profits from physical book sales will be donated to Médecins Sans Frontières, a charity that provides medical assistance to people affected by conflict, epidemics, disasters, or exclusion from healthcare. Fixing The Privacy Gap In Proof Of Liability Protocols In this report, we examine the state of proof of assets and proof of liability schemes in the cryptocurrency space, systems whereby exchanges publish a list of user balances, which add up to the total exchange liability. BitMEX Research then proposes a new proof of liability scheme, which mitigates many of these privacy problems. Proof Of Reserves & Liabilities Following the publication of a new proposed Proof of Reserves-based system which preserves user privacy, we use this report to provide a working example using the BitMEX platform. Latest News from BitMEX BitMEX Teams Up With AC Milan As Its First-Ever Sleeve Partner We are proud to announce our multi-year partnership with world-renowned football club AC Milan. This will make BitMEX AC Milan’s first-ever Official Sleeve Partner and the Official Cryptocurrency Trading Partner of the Rossoneri. Our sponsorship extends to both the men’s and women’s teams, as well as the Rossoneri’s eSports team – AQM. BitMEX confirms it has reached settlements with CFTC and FinCEN We have confirmed that we reached a resolution with both the United States Commodity Futures Trading Commission (CFTC) and Financial Crimes Enforcement Network (FinCEN) in relation to investigations by both agencies. Crypto is changing, and BitMEX is changing with it In this piece by BitMEX CEO Alexander Höptner, Alex adds further perspective on why our settlement with CFTC and FinCEN is a tremendous step in the right direction for us and our users. Social Spotlight View this email in your browser No articles in this email should be copied or reproduced in whole or in part. The information contained does not constitute research or a recommendation. Neither HDR Global Trading Limited nor any of its affiliates make any representation or warranty as to the accuracy or completeness of the statements or any information contained in these articles and any liability therefor (including in respect of direct, indirect or consequential loss or damage) is expressly disclaimed. This is not providing any financial, economic, legal, accounting or tax advice or recommendations. In addition, the receipt of this email is not to be taken as constituting the giving of investment advice nor to constitute such person a client of the BitMEX trading platform. This email was sent to <<Email Address>> why did I get this? unsubscribe from this list update subscription preferences BitMEX · Suite 202, 2nd Floor, Eden Plaza · Eden Island · Mahe · Seychelles @media only screen and (max-width: 480px){ table#canspamBar td{font-size:14px !important;} table#canspamBar td a{display:block !important; margin-top:10px !important;} }
  4. style="height: 100%;margin: 0;padding: 0;width: 100%;-ms-text-size-adjust: 100%;-webkit-text-size-adjust: 100%;background-color: #FAFAFA;"> Enjoy the Latest Edition of Crypto Trader Digest - Serf No More ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ A Message from Alexander Höptner, CEO of BitMEX Before I introduce Serf No More, Arthur’s latest piece, I’d like to mention a significant development from the world of BitMEX this week. On Tuesday, Chainalysis removed the ‘high risk’ label it had held in place for BitMEX for less than a year. Although we disagreed with Chainalysis’ assessment at the time, we kept channels of communication open. We’re glad to get this result, and are very proud of the progress we’ve made on matters of compliance, AML, and user verification in the meantime. Speaking of progress, this week’s Crypto Trader Digest has Arthur tracking El Salvador, the first country to make bitcoin legal tender. In his signature irreverent style, we go deep into how Arthur thinks El Salvador could create a bitcoin-backed currency, and how meaningful that might be for countries most at risk by the quickening pace of automation in the labour markets. Like the entire crypto community, I’m bullish on El Salvador. You’ll be too after reading the latest Crypto Trader Digest, Serf No More. - Alex (@AlexHoeptner) From the Desk of Arthur Hayes Serf No More (Any views expressed in the below are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.) The greatest nation states and civilisations efficiently use energy to create economic prosperity for their subjects. Up until recently, energy meant human labour. The state constructs a system where labour is provided and an economic energy surplus is created. There are various ways in which the great societies of past and present “paid” for labour. Pre-Industrial Revolution Rome - Captured slaves from conquest America - Transatlantic African slavery Pre-Industrial Western Europe - Feudal serfs Post-industrial revolution, most societies moved away from implicit or explicit slavery towards a system where the wages of labour were not allowed to grow at the same rate as the overall economy. That is a long-winded way of saying savers are financially repressed. Workers save at a depressed rate, and the difference allows a country to direct national savings towards heavy industrialisation. Modern China, Taiwan, South Korea, and Japan are excellent recent examples of post WWII nations that quickly industrialised using the savings of their labourers. I will repost this chart of the China 10-year government bond yield vs. real GDP growth. These negative rates have allowed China to internally finance the creation of the industrial behemoth that supplies most of the world’s stuff... Click here to continue reading this edition of Crypto Trader Digest – Arthur Hayes, Co-Founder of BitMEX (@CryptoHayes) From BitMEX Research The Blocksize War - Chapter 19 and 20 The latest chapters of The Blocksize War cover the emergence of both Bitcoin Cash and Segwit2x, adding further conflict to the war. If you want to get ahead and read the full book, it's available on Amazon. Half of any profits from physical book sales will be donated to Médecins Sans Frontières, a charity that provides medical assistance to people affected by conflict, epidemics, disasters, or exclusion from healthcare. New Open Source Bitcoin Developer Grant for Sjors Provoost BitMEX is delighted to announce that we will be providing a part time Bitcoin developer grant to Sjors Provoost until the end of May 2022, a commitment of US$37,500. Sjors will join the other three Bitcoin developers currently financially supported by BitMEX: Michael Ford, Gleb Naumenko and Calvin Kim. Latest News from BitMEX Chainalysis Removes High Risk Assessment of BitMEX Platform A message from Malcolm Wright, Chief Compliance Officer at BitMEX. Chainalysis has revised its risk assessment of BitMEX, removing the ‘high risk’ label it had held in place for less than a year. This followed an internal review of the criteria for the High Risk Exchange category by Chainalysis. The revision comes amid our continuous work to deliver industry leading compliance, AML, and user verification programmes. The BitMEX Partner Programme Expands into Phase Two With 17 New Additions Earlier this year, we successfully launched our official BitMEX Partner Programme. Now, we are thrilled to announce phase two of the programme with the addition of 17 new firms into the BitMEX ecosystem. As official partners, they will offer their services to our users, and also be rewarded based on the activity they refer to BitMEX. Ethereum (ETH) London Hard Fork and Impact on BitMEX ETHUSD Perpetual, ETHUSDU21, and ETHU21 Futures Contracts Ethereum will undergo the scheduled London Hard Fork on 5 August 2021. Three BitMEX contracts (ETHUSD, ETHUSDU21 and ETHU21) and two BitMEX indices (.BETH and .BETHXBT) will be impacted and these markets will be open during the fork. Social Spotlight View this email in your browser No articles in this email should be copied or reproduced in whole or in part. The information contained does not constitute research or a recommendation. Neither HDR Global Trading Limited nor any of its affiliates make any representation or warranty as to the accuracy or completeness of the statements or any information contained in these articles and any liability therefor (including in respect of direct, indirect or consequential loss or damage) is expressly disclaimed. This is not providing any financial, economic, legal, accounting or tax advice or recommendations. In addition, the receipt of this email is not to be taken as constituting the giving of investment advice nor to constitute such person a client of the BitMEX trading platform. This email was sent to <<Email Address>> why did I get this? unsubscribe from this list update subscription preferences BitMEX · Suite 202, 2nd Floor, Eden Plaza · Eden Island · Mahe · Seychelles @media only screen and (max-width: 480px){ table#canspamBar td{font-size:14px !important;} table#canspamBar td a{display:block !important; margin-top:10px !important;} }
  5. style="height: 100%;margin: 0;padding: 0;width: 100%;-ms-text-size-adjust: 100%;-webkit-text-size-adjust: 100%;background-color: #FAFAFA;"> Enjoy the Latest Edition of Crypto Trader Digest - I'm All Shook Up ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ A Message from Alexander Höptner, CEO of 100x Group Lots of traders are singing the blues this summer, with the bitcoin price movement appearing sluggish, global derivatives volumes lethargic, and the ‘bear market’ doldrums of crypto twitter. It’s times like these that make or break a trader, and in the latest edition of Crypto Trader Digest, Arthur gives us a helping of studied perspective to help us along. For him, there’s one piece of macro data we should consider when ‘zooming out’ - the pace of central balance sheet expansion. I hope you, like many others, can’t help falling in love with good content like this. - Alex (@AlexHoeptner) From the Desk of Arthur Hayes I'm All Shook Up (Any views expressed in the below are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.) Every Summer Is The Fucking Same ! When crypto hits the northern hemispheric summer, people lose their bearings. Price Volatility: Rekt Price Performance: Rekt to sideways Exchange Trading Volumes: Abysmal Crypto Trader Sentiment: Despondent Staying focused on what matters becomes increasingly difficult as we are bombarded with data through our internet connected devices. There is always some piece of information that can cloud our minds. But those who are focused care not for the vicissitudes of the 24/7 social media dopamine-distributing news cycle. They only analyse what they believe is the key driver of financial returns. Zooming out, I am only focused on one piece of macro data, and that is the pace of central bank balance sheet expansion. If the quantum of money increases, it must go somewhere. Crypto alongside stonks, commodities, housing, and bonds etc. will all receive the manna from unelected bureaucrats. Let’s take stock of what our monetary masters cooked up for our financial wellbeing in the first half of 2021. The three central banks that matter are The US Federal Reserve, The People’s Bank of China, and the European Central Bank. Combined, these three entities pump the lion’s share of fiat wampum into the arteries of the global economy. These central banks also represent the largest economies in the world. Here is my simple checklist, for my simple investor brain... Click here to continue reading this edition of Crypto Trader Digest – Arthur Hayes, Co-Founder of 100x Group (@CryptoHayes) From BitMEX Research The Blocksize War - Chapter 17 and 18 In the latest chapters of The Blocksize War, we take a look at how a single email sent to the Bitcoin emailing list sparked a movement, as well as the developments that followed the New York Agreement. If you want to get ahead and read the full book, it's available on Amazon. Half of any profits from physical book sales will be donated to Médecins Sans Frontières, a charity that provides medical assistance to people affected by conflict, epidemics, disasters, or exclusion from healthcare. Latest News from BitMEX Open Source Developer Grant Programme Re-opening BitMEX is delighted to announce that the Open Source Developer Grant programme has re-opened for new applicants. In the coming months we plan to identify one or two more open source Bitcoin developers to support, initially for around twelve months but hopefully for the longer term. Scheduled Temporary Downtime on 29 July (Mainnet) for Upgrades to Operating System As we continue to enhance the BitMEX platform for our users, we will be facilitating a major upgrade to our operating system that will temporarily halt trading in our production (Mainnet) environment on Thursday, 29 July at 02:15 UTC. Social Spotlight View this email in your browser No articles in this email should be copied or reproduced in whole or in part. The information contained does not constitute research or a recommendation. Neither HDR Global Trading Limited nor any of its affiliates make any representation or warranty as to the accuracy or completeness of the statements or any information contained in these articles and any liability therefor (including in respect of direct, indirect or consequential loss or damage) is expressly disclaimed. This is not providing any financial, economic, legal, accounting or tax advice or recommendations. In addition, the receipt of this email is not to be taken as constituting the giving of investment advice nor to constitute such person a client of the BitMEX trading platform. This email was sent to <<Email Address>> why did I get this? unsubscribe from this list update subscription preferences BitMEX · Suite 202, 2nd Floor, Eden Plaza · Eden Island · Mahe · Seychelles @media only screen and (max-width: 480px){ table#canspamBar td{font-size:14px !important;} table#canspamBar td a{display:block !important; margin-top:10px !important;} }
  6. style="height: 100%;margin: 0;padding: 0;width: 100%;-ms-text-size-adjust: 100%;-webkit-text-size-adjust: 100%;background-color: #FAFAFA;"> Enjoy the Latest Edition of Crypto Trader Digest - Stablecoin Triptych ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ A Message from Alexander Höptner, CEO of 100x Group Even in the best of times, criticism of the crypto ecosystem is always present. When this prompts honest examination - and improvement - it can be healthy. But dishonest or misinformed FUD (fear, uncertainty, and doubt) can be dangerous. This brings us to stablecoins, which are the subject of so much debate and misinformation. In this week’s Crypto Trader Digest, Arthur shares his views on the future of Tether, Facebook’s stablecoin ambitions, and central bank digital currencies. Enjoy. - Alex (@AlexHoeptner) From the Desk of Arthur Hayes Stablecoin Triptych (Any views expressed in the below are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.) The height of the northern hemispheric summer is here, and it’s vaxx-enabled party time. Don’t expect much in the way of volumes and/or volatility while traders get some well-earned time to spend their spoils. Since the traders have taken much of the market intrigue with them as they frolic their way through the Mediterranean, I wanted to use this down time to explore one of the space’s most historically divisive topics – stablecoins. From Tether, to Facebook, to Central Bank Digital currencies, I’ll take this opportunity to riff on some of my biggest stablecoin pet peeves and thoughts on what the stablecoin future might hold. Enjoy. The Achilles Heel of Crypto When doubting the viability of the crypto capital markets, turn up some Tether FUD. I become quite irked when I read Mickey Mouse analysis that proclaims irreparable harm will visit the crypto markets should Tether break the buck. To demonstrate how ridiculously shallow this argument is, follow me through a very simple thought experiment. As I write this, Tether (USDT) has a circulating supply of $62.5 billion (according to CoinGecko). This is also its market cap, because each USDT is backed by a physical US dollar … supposedly. For the sake of argument, let’s assume that one day, Tether discloses that it has exactly $0 in physical assets, rendering each USDT worth absolutely nothing. To keep this hypothetical simple, let’s also assume that the crypto capital markets consist only of Bitcoin and Ethereum. What would happen to our ecosystem when all USDT holders are rugged? Ethereum USDT is an ERC-20 token, which means it uses the Ethereum blockchain protocol to juke and jive. In this scenario, all USDT holders have lost everything – so what happens to the Ethereum protocol? Will blocks continue to be produced approx. every 10 to 15 seconds? Yes, the loss of USDT does not mean that Ethereum miners cannot complete proof-of-work puzzles. Ethereum mining has no USDT dependency. This means that after losing $62.5 billion in value, participants may still use the Ethereum blockchain. Will any other ERC-20 tokens cease to work? It is possible that any ERC-20 token that used USDT as collateral underpinning its value will see a near total collapse. However, these tokens will be sold using the still functioning Ethereum blockchain. Again, and most importantly, the Ethereum protocol will continue to work as designed. Can anyone double spend Ether (ETH)? No. Remember, the Ethereum blockchain has no USDT dependency. Therefore, a malicious actor will not be able to double spend ETH just because all USDT holders get rickety rekt. Can projects still launch new ERC-20 tokens? Yes. Again, the Ethereum blockchain continues to work just as before. Can the Ethereum protocol still be updated? Yes. Just because USDT no longer exists doesn’t mean smart engineers can’t improve the protocol. Bitcoin USDT started as a pseudo Bitcoin sidechain using the Omni protocol, but then migrated mostly to ERC-20. What happens to the Bitcoin protocol? Will blocks continue to be produced approx every 10 minutes? Yes, the loss of USDT does not mean that Bitcoin miners cannot complete proof-of-work puzzles. Bitcoin mining has no USDT dependency. Can anyone double spend Bitcoin (BTC)? No. Remember the Bitcoin blockchain has no USDT dependency. Can the Bitcoin protocol still be updated? Yes. Just because USDT no longer exists doesn’t mean engineers can’t improve the protocol. Click here to continue reading this edition of Crypto Trader Digest – Arthur Hayes, Co-Founder of 100x Group (@CryptoHayes) From BitMEX Research The Blocksize War - Chapter 15 and 16 In the latest chapters of The Blocksize War, we take a look at one of the most influential groups within the small blocker's camp - Dragon's Den. Then, the small blockers gain crucial momentum with the activation of SegWit on Litecoin. If you want to get ahead and read the full book, it's available on Amazon. Half of any profits from physical book sales will be donated to Médecins Sans Frontières, a charity that provides medical assistance to people affected by conflict, epidemics, disasters, or exclusion from healthcare. Latest News from BitMEX Scheduled Temporary Downtime for 15 July (Testnet) and 29 July (Mainnet) for Upgrades to Operating System As we continue to enhance the BitMEX platform for our users, we will be facilitating a major upgrade to our operating system that will temporarily halt trading in our Testnet environment on Thursday, 15 July at 02:15 UTC, and our production (Mainnet) environment on Thursday, 29 July at 02:15 UTC. BitMEX Promotes Brian Rankin to Chief Information Security Officer Brian Rankin has been promoted to the role of Chief Information Security Officer as we make good on our commitment to protect customers and stakeholders. In his new role, Brian will continue to build a world class team that can protect our information assets from the growing threat from a range of malicious actors. What We’ve Learned, Six Months After Becoming the Largest Fully Verified Derivatives Exchange It’s fair to say that our decision to implement comprehensive know-your-customer (KYC) last year was one of the most consequential decisions in our company’s history. Six months on, with the benefit of hindsight, we also think it was one of the best decisions for our long-term future. Here’s why. BitMEX x HASH CIB: Crypto Asset Management Re-imagined We are thrilled to once again expand our BitMEX Partner Programme ecosystem with the official addition of HASH CIB into our community. HASH CIB was established in 2017 and is currently one of the largest and most impactful crypto investment firms in the industry. The company focuses primarily on asset management and venture capital. Social Spotlight View this email in your browser No articles in this email should be copied or reproduced in whole or in part. The information contained does not constitute research or a recommendation. Neither HDR Global Trading Limited nor any of its affiliates make any representation or warranty as to the accuracy or completeness of the statements or any information contained in these articles and any liability therefor (including in respect of direct, indirect or consequential loss or damage) is expressly disclaimed. This is not providing any financial, economic, legal, accounting or tax advice or recommendations. In addition, the receipt of this email is not to be taken as constituting the giving of investment advice nor to constitute such person a client of the BitMEX trading platform. This email was sent to <<Email Address>> why did I get this? unsubscribe from this list update subscription preferences BitMEX · Suite 202, 2nd Floor, Eden Plaza · Eden Island · Mahe · Seychelles @media only screen and (max-width: 480px){ table#canspamBar td{font-size:14px !important;} table#canspamBar td a{display:block !important; margin-top:10px !important;} }
  7. style="height: 100%;margin: 0;padding: 0;width: 100%;-ms-text-size-adjust: 100%;-webkit-text-size-adjust: 100%;background-color: #FAFAFA;"> Enjoy the Latest Edition of Crypto Trader Digest - I Still Can’t Draw a Line ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ A Message from Alexander Höptner, CEO of 100x Group Humans crave simple answers to complex questions. And in the pursuit of answers, we tend to bring our biases, rigid frameworks of thinking, and ideologies along with us. Great traders - whether crypto or otherwise - learn to manage this analytical baggage in the pursuit of cold, hard alpha. But as crypto breaks into the mainstream we’re seeing an exciting fusion - some may call it an exciting clash - of ideologies, not least on the role of leverage in crypto. In this week’s Crypto Trader Digest, Arthur takes the anti-leverage argument to task, delves into the differering role of leverage in the crypto vs. traditional markets, and looks at leverage ratios of some of the biggest banks - with some findings that might surprise you. This is one to share with the crypto skeptics. - Alex (@AlexHoeptner) From the Desk of Arthur Hayes I Still Can’t Draw a Line (Any views expressed in the below are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.) One fine chill day in my senior year of university, one of my besties frantically called me in hopes I could help her pass an upcoming economics exam. I obliged, and we met up that day to go over some material. She provided a practice exam and we attempted to tackle the first question. To kick things off, I asked her to draw the demand curve. She looked at me like I was speaking Aramaic. I dug a little deeper, and asked if she understood how to represent a demand or supply curve linearly with a given slope. Again, she was silent. She had a few days at most until the exam, and I told her if she couldn’t even draw a line, there was no hope of me being able to teach her enough stuff to pass this exam. She somehow managed to pass, no thanks to my efforts. Currently, she runs her family’s pizza restaurant. We were chatting recently about the issues she is facing due to the pandemic. Labour Issues: She employs a lot of university-aged kids. As schools are going back to in-person classes, she is losing a lot of labour. However, she can’t replace lost workers easily because with all the various government checks, her wage rate is not competitive with Netflix and Chill courtesy of the USG. Food Inflation: She lamented about the spike in the cost of chicken and beef. She raised her delivery charge from $1 to $2. People were pissed— that charge hadn’t changed in 40 years. Hmm… 40 years is about how long it’s been since real wages have grown in the US. Here are some colourful snippets of our WhatsApp chat: “Customers crazy” “Prices of all goods crazy” “Chicken” “Pork beef” “And there’s so many things I don’t even want the customer to order because I’ll lose money lol” “People already complain” “They complain I made the delivery charge $2” “When for 40 years it was only $1” “Or the fact that we have a $15 minimum for delivery and people want a single sandwich delivered when I tell them they say that they only have $10.” The conversation drew to a close when she asked on behalf of her brother whether Cardano was a good crypto to buy. “I don’t know wtf it is” “I still can’t draw a line” “Basically he wants to make the most money” As usual, I disappointed her again by not providing the golden ticket to crypto riches (because I don’t have it). I gave my usual spiel about reading the white-paper, linked her to my blog, and told her to tell her brother there are no shortcuts. I tell this story to illustrate the gulf between an-on-the ground economic reality, and what our classically trained economic mandarins proclaim their “models” tell them about the health and trajectory of the global economy. All those erudite university grads can certainly draw lines. I can draw an IS / LM model like the best university regurgitator student. But these same people tell us inflation is “transitory”. At some point business owners will have to pay more labour to fill positions, and pass labour and input cost increases onto customers. I promise this essay will not be another diatribe about inflation. This fortnight we talk about the Kwisatz Haderach, LEVERAGE! Click here to continue reading this edition of Crypto Trader Digest – Arthur Hayes, Co-Founder of 100x Group (@CryptoHayes) From BitMEX Research The Blocksize War - Chapter 13 and 14 The latest chapters of The Blocksize War cover the role of exchanges in the conflict, as well as bombshell accusations of a secret agenda among some large blockers. If you want to get ahead and read the full book, it's available on Amazon. Half of any profits from physical book sales will be donated to Médecins Sans Frontières, a charity that provides medical assistance to people affected by conflict, epidemics, disasters, or exclusion from healthcare. Latest News from BitMEX BitMEX Hires Marc Robinson as Head of Custody We’re delighted to welcome another senior new hire, this time in the form of Marc Robinson who joins us as Head of Custody. Marc joins BitMEX with more than 20 years experience, much of which was gained with traditional financial services firms in Japan. He started his career in IT and moved to ‘front office’ electronic trading with Lehman Brothers, then Nomura and then JP Morgan. BitMEX x hamster-bot: Automated Trading With Just A Few Clicks Our partnership ecosystem continues to grow - we are pleased to welcome hamster-bot to the BitMEX Partner Programme. A well-known trading bot, hamster-bot is run by an experienced team and has a rich history of use by BitMEX users since 2018. BitMEX x Wunderbit: Trading on Autopilot Made Easy! We’re excited to welcome Wunderbit Trading to our Partner Programme. Regulated and licensed in Estonia, the Wunderbit platform not only allows its users to buy and sell cryptocurrencies in a simple, safe, and secure way, but they also provide tools for deploying various trading strategies Social Spotlight View this email in your browser No articles in this email should be copied or reproduced in whole or in part. The information contained does not constitute research or a recommendation. Neither HDR Global Trading Limited nor any of its affiliates make any representation or warranty as to the accuracy or completeness of the statements or any information contained in these articles and any liability therefor (including in respect of direct, indirect or consequential loss or damage) is expressly disclaimed. This is not providing any financial, economic, legal, accounting or tax advice or recommendations. In addition, the receipt of this email is not to be taken as constituting the giving of investment advice nor to constitute such person a client of the BitMEX trading platform. This email was sent to <<Email Address>> why did I get this? unsubscribe from this list update subscription preferences BitMEX · Suite 202, 2nd Floor, Eden Plaza · Eden Island · Mahe · Seychelles @media only screen and (max-width: 480px){ table#canspamBar td{font-size:14px !important;} table#canspamBar td a{display:block !important; margin-top:10px !important;} }
  8. style="height: 100%;margin: 0;padding: 0;width: 100%;-ms-text-size-adjust: 100%;-webkit-text-size-adjust: 100%;background-color: #FAFAFA;"> Enjoy the Latest Edition of Crypto Trader Digest - Thirst Trap ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ A Message from Alexander Höptner, CEO of 100x Group No one becomes a (consistently) successful trader overnight. However, there is a trait of those who manage to pick it up quickly, which is having the ability to think critically and independently. What stands in the way for many is the refusal to put emotions aside and absorb information dispassionately. Hard pill to swallow, but it’s the truth. Staying stuck in your echo chamber or just adopting the beliefs of the loudest person in the room is a recipe for disaster when it comes to investing. This habit, that many of us have, has to stop in order to fully understand markets of any description. In this latest edition of Crypto Trader Digest, Arthur takes a look at some of the top trending topics in the crypto space, and in true Arthur fashion, presents you with facts that will challenge your thinking, positively. Enjoy. - Alex (@AlexHoeptner) From the Desk of Arthur Hayes Thirst Trap (Any views expressed in the below are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.) The majority of my essays in 2021 have focused on the fundamental building blocks of my bullish opinion on the future of crypto. Few words are dedicated to current events unfolding before us. In an age when virtue signaling social media influencers reign supreme, critical thought that deconstructs popular narratives using logic and first principles thinking is hardly proffered. It’s why I prefer to read something a few thousand words in length – even if I disagree with the author – because the length allows the writer to dig into the grey of an issue. Few things in this world are black and white – everything is a shade of grey. 6 second TikTok videos, on the other hand, can only convey so much information. Maybe I’m just an old curmudgeon who refuses to purse my lips like a duck and create thirst traps posing in front of material objects I don’t own. In this piece, I’ll offer my thoughts on a few topics du jour that are currently floating around the popular media narrative soup. My goal is to provoke thought. None of my musings here are intended to be read as actionable trade ideas, but if one of these narratives run counter to a belief you have about a particular crypto asset, hopefully reading these words will allow for a moment of reflection that could culminate in a change in your perspective. Keyboard Warriors Take Control of Environmental Policy I’m glad I spend more time hitting balls with a racquet than following the tweet storm of the day. If there is one topic that fundamentally irks me, it’s the current ESG narrative – i.e. that fossil fuels are the devil, and that it is economically viable today for us to stop burning fossil fuels altogether. If followed blindly, I believe this fundamental misunderstanding will result in a significant misallocation of capital due to first level shallow thinking. I’m not denying that burning fossil fuels has a major impact on our environment. Energy rules everything we do in life. We consume it to live and enjoy ourselves. And the ways in which we produce energy have externalities. Here is what I know, cause I’m good at the internet. Click here to continue reading this edition of Crypto Trader Digest – Arthur Hayes, Co-Founder of 100x Group (@CryptoHayes) From BitMEX Research The Blocksize War - Chapter 11 and 12 Regular readers of this Crypto Trader Digest newsletter will be well aware of the Blocksize War book by now, covering a fascinating period in the development and evolution of the Bitcoin Protocol. We hope you’ve been enjoying chapters as they’ve been released. If you want to get ahead and read the full book, it's available on Amazon. Half of any profits from physical book sales will be donated to Médecins Sans Frontières, a charity that provides medical assistance to people affected by conflict, epidemics, disasters, or exclusion from healthcare. Latest News from BitMEX Bitcoin on the Moon, Courtesy of BitMEX BitMEX will mint a one-of-a-kind physical bitcoin, similar to the Casascius coins of 2013, which will be delivered to the Moon by Astrobotic. The coin will hold one bitcoin at an address to be publicly released, underneath a tamper-evident hologram covering. The coin will proudly display the BitMEX name, the mission name, the date it was minted and the bitcoin price at the time of minting. BitMEX Receives Important ISO Information Security Certification It’s difficult to overstate the importance of information security for a platform like BitMEX. Traders trust us because of our track record on security – we have never lost a single Satoshi through intrusion or hacking. But security is never a static process and in order to continue to set the bar as high as possible, we sought – and were awarded – one of the most rigorous certifications: ISO/IEC 27001. BitMEX x Napoleon Group: The Newest Addition to Our Growing Partner Programme We’re excited to announce the growth of our ecosystem through our collaboration with Napoleon Group. Napoleon Group has been a pioneer in crypto investments since 2017, and combines quantitative asset management and blockchain expertise to offer new and innovative ways to invest in digital assets, while complying with the highest regulatory standards to address the needs of all investors. Social Spotlight View this email in your browser No articles in this email should be copied or reproduced in whole or in part. The information contained does not constitute research or a recommendation. Neither HDR Global Trading Limited nor any of its affiliates make any representation or warranty as to the accuracy or completeness of the statements or any information contained in these articles and any liability therefor (including in respect of direct, indirect or consequential loss or damage) is expressly disclaimed. This is not providing any financial, economic, legal, accounting or tax advice or recommendations. In addition, the receipt of this email is not to be taken as constituting the giving of investment advice nor to constitute such person a client of the BitMEX trading platform. This email was sent to <<Email Address>> why did I get this? unsubscribe from this list update subscription preferences BitMEX · Suite 202, 2nd Floor, Eden Plaza · Eden Island · Mahe · Seychelles @media only screen and (max-width: 480px){ table#canspamBar td{font-size:14px !important;} table#canspamBar td a{display:block !important; margin-top:10px !important;} }
  9. style="height: 100%;margin: 0;padding: 0;width: 100%;-ms-text-size-adjust: 100%;-webkit-text-size-adjust: 100%;background-color: #FAFAFA;"> View this email in your browser A Message from Alexander Höptner, CEO of 100x Group All of us as investors believe in the immutability of numbers and the sobering reality of cold-blooded analysis. But when the proverbial bullets are flying, we often allow our fears, doubts, and emotions to come into play. Market fluctuations of the kind we saw in the past week provide a test for crypto traders. Do we have conviction in our investment thesis? What underpins those convictions? And crucially - what evidence do we need to see to change our minds about an asset? In this edition of Crypto Trader Digest, Arthur urges us to zoom out and re-examine why, in his view, we should take a macro-view. It’s a journey that takes us from the monetary policy of the World War II era to what modern-day COVID recovery policies might mean for the Fed’s balance sheet. Number go up has multiple meanings in this case. Enjoy. - Alex (@AlexHoeptner) From the Desk of Arthur Hayes FARB< L >AST OFF < GO > (Any views expressed in the below are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.) For those of you who have a Bloomberg terminal, run FARBAST Index <GO>. This is the index that outputs the US Federal Reserve’s balance sheet in millions of USD updated weekly. I keep droning on about this, but this number and its trajectory is the only thing that matters. If you have confidence that the Fed’s balance sheet will rise exponentially from today’s levels, then short term wobbles in the crypto markets become immaterial. To be clear, there are two things that matter to my overall bullishness on the macro cryptocurrency market cap. The US Government will begin to engage in nominal GDP targeting financed by the Fed purchasing Treasury bills, notes, and bonds. Therefore the Fed’s balance sheet will be higher than today. Decentralised finance (DeFi) will aggressively disintermediate many rent-seeking activities performed by centralised financial services institutions. The savings due to cheaper fees and more inclusiveness will flow to the end user and those who hold the tokens. The hyper growth of point 1 provides the push to accelerate point 2. Self-perpetuation and growth are the two universal constants when evaluating the potential actions of organisms or a civilisation which is a collection of humans. Most modern societies have an underlying assumption of infinite growth. Look no further than how we price a stock. A stock’s value is the discounted stream of all future cash flows. The terminal value assumes the company continues to exist and grow forever. That is obviously empirically false, but we plug it into our fancy model anyway. Therefore, my overarching assumption is that growth is preferred and assumed. The question is cost. There are various ways to pay for growth, and one of the most effective on a national level is nominal GDP targeting paid for with borrowed money. To fully understand why I am so confident that the Fed’s balance sheet might be 10x higher in short order, I will compare how America dealt with the aftermath of WW2 to how it will deal with the aftermath of the world war on COVID-19. The political and economic conundrum is always, "how does a nation continue to grow after a destructive crisis?". This is the Crypto Trader Digest, but I spend a lot of time talking about American monetary policy instead of the fundamental merits of a decentralised monetary and financial system over the current parasitic centralised system that reigns supreme. We live in a USD world. It is plain to anyone who reads Satoshi’s whitepaper that the 2008 financial crisis and the response of all major central banks was one reason why Satoshi believed something better could be created. Therefore, an appreciation of and confidence in the trajectory of the most important financial institution globally, the US Federal Reserve, will allow any speculator to shrug off being down 30% to 50% on the day, because they know that in less than ten years the tsunami of money printing will take the crypto complex’s market cap to unimaginable levels. Before we go back in time to 1939, check this. Due to the gargantuan US fiscal stimulus enacted to fight COVID, Federal net outlays represented 31% of 2020 GDP. That makes the US government as a stand-alone entity the 3rd largest economy as measured by 2020 GDP globally — just behind the US private sector and China. The great thing about any large centralised government is they collect a lot of statistics. You can’t manage what you don’t measure. Therefore, the richness of statistics during and after WW2 allows anyone with an internet connection to connect the dots. Let me TL;DR this essay for the TikTok’ers; I know I probably lost you at my first sentence, but I hope by now your attention span can spare 2 minutes... Click here to continue reading this edition of Crypto Trader Digest – Arthur Hayes, Co-Founder of 100x Group (@CryptoHayes) From BitMEX Research Faster Blockchain Validation with Ultreexo Accumulators In this piece, 100x Group grantee Calvin Kim announces the success in speeding up Bitcoin’s Initial Block Download (IBD) using the Utreexo client. While the speed improvement can vary depending on one’s local hardware and bottlenecks, the initial download and verification can be up to 62% faster compared to Bitcoin Core. Since many optimisations are yet to be implemented, the speedup is expected to increase. The Blocksize War - Chapters 9 and 10 The continuation of The Blocksize War have been released on the BitMEX blog. This book covers Bitcoin’s blocksize war, which was waged from August 2015 to November 2017. On the surface the battle was about the amount of data allowed in each Bitcoin block, however it exposed much deeper issues, such as who controls Bitcoin’s protocol rules. The full book is available on Amazon. Half of any profits from physical book sales will be donated to Médecins Sans Frontières, a charity that provides medical assistance to people affected by conflict, epidemics, disasters, or exclusion from healthcare. Latest News from BitMEX BitMEX Commits to Carbon Neutrality We’re happy to confirm that BitMEX commits to becoming carbon neutral. The first step we’ll take immediately is to start carbon offsetting emissions caused by withdrawals from the platform through donating at least $0.0026 for every $1 of blockchain fees our clients pay out. Summer of Listings Begins on BitMEX: The SOLUSDT Quanto Perpetual Contract Tardis.dev, a provider of the most comprehensive and granular cryptocurrency market data products in the industry, has officially joined the BitMEX Partners Programme. Accurate, complete, historical market data are a trader’s best friend and are one of the most powerful resources in their toolkit. Collecting and parsing through exchange data is a time consuming and resource intensive process, not to mention the implementation costs of data collection, storage, and distribution services. BitMEX x Stacked: Growing the Partner Programme Even Further Stacked, a smart automated crypto investing platform and portfolio management tool that allows users to instantly access vetted trading strategies and investment portfolios, has officially joined the BitMEX Partners Programme.Stacked tech helps to simplify the automated crypto trading process with a clean user interface and UX that allows everyone to invest in crypto indices, access trading bots, and automate portfolio management, and therefore represents a great addition to the programme. Traders can access the comprehensive Bot Marketplace that allows users to subscribe to sophisticated trading algorithms and strategies. Once set up, there is no need to actively manage your trading account, as the bots take care of the entire process from end-to-end. Social Spotlight No articles in this email should be copied or reproduced in whole or in part. The information contained does not constitute research or a recommendation. Neither HDR Global Trading Limited nor any of its affiliates make any representation or warranty as to the accuracy or completeness of the statements or any information contained in these articles and any liability therefor (including in respect of direct, indirect or consequential loss or damage) is expressly disclaimed. This is not providing any financial, economic, legal, accounting or tax advice or recommendations. In addition, the receipt of this email is not to be taken as constituting the giving of investment advice nor to constitute such person a client of the BitMEX trading platform. This email was sent to <<Email Address>> why did I get this? unsubscribe from this list update subscription preferences BitMEX · Suite 202, 2nd Floor, Eden Plaza · Eden Island · Mahe · Seychelles @media only screen and (max-width: 480px){ table#canspamBar td{font-size:14px !important;} table#canspamBar td a{display:block !important; margin-top:10px !important;} }
  10. Bitcoin Core version 0.21.1 is now available View the full article
  11. style="height: 100%;margin: 0;padding: 0;width: 100%;-ms-text-size-adjust: 100%;-webkit-text-size-adjust: 100%;background-color: #FAFAFA;"> View this email in your browser A Message from Alexander Höptner, CEO of 100x Group The power of science fiction is that it takes us out of our comfortable bubble and places us into an alternate reality, exposing the absurdities of life as we know it. Knowing this, what could we gain by forcing ourselves to confront uncomfortable truths? This could be quite valuable to how we live our lives - and a lucrative macro thought exercise for crypto traders and investors as well. In this sure-to-be-memorable edition, Arthur challenges his own thinking, unpeels flimsy social constructs, and gives us some food for thought. Let’s feast. - Alex (@AlexHoeptner) From the Desk of Arthur Hayes Fear Is The Mind-Killer (Any views expressed in the below are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.) "I must not fear. Fear is the mind-killer. Fear is the little-death that brings total obliteration. I will face my fear. I will permit it to pass over me and through me. And when it has gone past I will turn the inner eye to see its path. Where the fear has gone there will be nothing. Only I will remain." - Paul Atreides, Dune I love sci-fi novels. At any given time, I am reading at least one sci-fi novel. Dune, by Frank Herbert, is the single best sci-fi novel ever written. The full six book series is quite good, but the quality tapers off after the first book. The best sci-fi book series is The Three-Body Problem trilogy by Liu Cixin. It is just astoundingly well written; I wish my Mandarin was better so I could read it in Chinese rather than an English translation. If you like sci-fi this shit is the TRUTH. I’m also super pumped for the upcoming Foundation TV series. Asimov is a gangster. Us traders and investors are simple creatures driven by fear and greed. While greed goads humans into doing many incredible things, the fear of loss trumps all. Daniel Kahneman has a great body of work describing how humans’ decisions are not as rational as classical economists believe. In particular, monetary loss afflicts greater damage on our psyche than monetary gain. As we venture deeper into this epic crypto bull market, an evaluation of what scares us is essential because one or more of these narratives could supplant the desire of punters to keep BTFD. The Flippening A few weeks back, I got a message from Su Zhu of Three Arrows out of the blue. He asked me what I thought the probability was that the Ether market cap would surpass Bitcoin’s during this bull run. I replied 0%, and then asked his opinion. He hit back with 50%. Raoul Pal’s May 2021 edition of the Global Macro Investor dropped shortly afterwards. Contained, in the always amazing report, was a snippet of a lengthy report by Nikhil Shamapant on why Ether could reach $150,000 by Jan 2023. After reading the report, I sent Su another message updating my probability of the flippening occurring to 30%. There is a subsect of the Bitcoin community that has night tremors rooted in the fear that Ether will one day overtake their beloved currency, featuring images of Apostle Beuterin and Lord Lubin. I don’t get the tribalism, but check out Crypto Twitter for some epic Bitcoin vs. Ether rants. The Bitcoin maximalists believe that Bitcoin is the one true monetary god in the crypto firmament. Everything else is at best a supporting deity, at worst pure evil. On the other end of the spectrum are mETH heads who believe that Ether can be both the hardest form of crypto money and the world’s best decentralised computer. To them, after ETH 2.0 launches and the switch from Proof-of-Work to a Proof-of-Stake consensus algorithm is completed— currently slated for later this year— then Ether’s market cap will quickly eclipse Bitcoin’s. I try to eradicate dogma from my thinking as much as I can lest I become married to a way of thinking that will become outdated as time marches forward. I, as all humans, will fail in this endeavour, but hopefully I reduce future losses by reminding myself I can only predict the probability outcomes and act accordingly. The dogma surrounding Bitcoin and Ether must be stripped down to what the actual fundamental vision is for each crypto. Then we can build back up to the current state of affairs and evaluate whether the narrative fundamentally makes sense. What is Bitcoin / Ether? The best forms of money have no industrial use case. Fiat currencies are very useful for commerce because they are intrinsically worthless. The demand to use a particular fiat is completely tied to the usefulness of its network. The network in this case is the number of domestic and or international trading counterparties that will accept a particular fiat currency in exchange for goods and/or labour... Click here to continue reading this edition of Crypto Trader Digest – Arthur Hayes, Co-Founder of 100x Group (@CryptoHayes) From BitMEX Research Breaking Down The Fee Market (EIP-1559) In this report, we evaluate the theory behind the new Ethereum transaction fee mechanism, EIP-1559. Under the new model, there are two elements to the transaction fee - a base fee which is burned, and a tip which is allocated to block producers. The Blocksize War - Chapters Seven and Eight The continuation of The Blocksize War have been released on the BitMEX blog. This book covers Bitcoin’s blocksize war, which was waged from August 2015 to November 2017. On the surface the battle was about the amount of data allowed in each Bitcoin block, however it exposed much deeper issues, such as who controls Bitcoin’s protocol rules. The full book is available on Amazon. Half of any profits from physical book sales will be donated to Médecins Sans Frontières, a charity that provides medical assistance to people affected by conflict, epidemics, disasters, or exclusion from healthcare. Latest News from BitMEX BitMEX x 3Commas: Kicking Off the Partners Programme We’re proud to announce that 3Commas, a leading automated trading platform, has joined the BitMEX Partners Programme. As part of the partnership celebration, the BitMEX and 3Commas teams have unveiled exclusive privileges for users. BitMEX x Tardis.dev: Partnering to Bring Comprehensive, Fair, and Transparent Market Data to Users Tardis.dev, a provider of the most comprehensive and granular cryptocurrency market data products in the industry, has officially joined the BitMEX Partners Programme. Accurate, complete, historical market data are a trader’s best friend and are one of the most powerful resources in their toolkit. Collecting and parsing through exchange data is a time consuming and resource intensive process, not to mention the implementation costs of data collection, storage, and distribution services. Social Spotlight No articles in this email should be copied or reproduced in whole or in part. The information contained does not constitute research or a recommendation. Neither HDR Global Trading Limited nor any of its affiliates make any representation or warranty as to the accuracy or completeness of the statements or any information contained in these articles and any liability therefor (including in respect of direct, indirect or consequential loss or damage) is expressly disclaimed. This is not providing any financial, economic, legal, accounting or tax advice or recommendations. In addition, the receipt of this email is not to be taken as constituting the giving of investment advice nor to constitute such person a client of the BitMEX trading platform. This email was sent to <<Email Address>> why did I get this? unsubscribe from this list update subscription preferences BitMEX · Suite 202, 2nd Floor, Eden Plaza · Eden Island · Mahe · Seychelles @media only screen and (max-width: 480px){ table#canspamBar td{font-size:14px !important;} table#canspamBar td a{display:block !important; margin-top:10px !important;} }
  12. style="height: 100%;margin: 0;padding: 0;width: 100%;-ms-text-size-adjust: 100%;-webkit-text-size-adjust: 100%;background-color: #FAFAFA;"> View this email in your browser A Message from Alexander Höptner, CEO of 100x Group There is no doubt that crypto markets can be volatile. During the weekend of 17 April, Bitcoin as well as the majority of the top ten cryptocurrencies by market cap dipped in price by 10% or more. While this may have resulted in nervous investors selling, it did little to shake long-term HODLers. And while hodling is an admirable strategy (and to date, a lucrative one), there are many investors who are constantly plagued with one question in particular - when do I take profits? If that’s you, don’t worry - you are not alone. In this edition of Crypto Trader Digest, Arthur shares a framework that will definitely get you thinking. Enjoy. - Alex (@AlexHoeptner) From the Desk of Arthur Hayes Grow Up or Blow Up (Any views expressed in the below are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.) Being right is great, but the true trading legends are right and then continue holding their positions until they are RICH. A lot of people lament that, had they bought Bitcoin back some years ago, if they held until today, they would be in a different wealth category. But how many shoulda, woulda, coulda investors could have bought Bitcoin at $1 and not sold when it doubled to $2, or how about 10x’d to $10. The difference between a trader and a truly prescient investor is having the courage to let your winners run until you reach the logical conclusion of the investing thesis that prompted the initial investment. That requires not just tactical trading acumen, but a macro belief in a theme or regime that powers the asset’s long term returns. I laid out in “Pumping Iron” my macro view on inflation and why I believe the crypto complex will feature the best returns in the financial asset firmament over the near to medium-term. The crypto complex market cap has grown markedly since then, now flirting with $2 trillion in total capitalisation. We are riding a bull market wave at the moment, and the question on many people’s minds is – “when should I step off the ride?” If we can predict the turning point where Bitcoin and cryptos cease to outperform the expansion of the reserve currency’s central bank balance sheet (The U.S. Federal Reserve), then the exit point is clear. To help identify that turning point, let’s go back in time and empirically evaluate how the major asset classes have or have not outperformed the Fed’s balance sheet expansion. (Note: I am choosing to focus on the Fed because of the USD’s status as the world’s reserve currency. Most of this analysis will still apply to other currencies, but as we live in a USD world, let’s analyse assets priced in USD.) And of course, before I get into it, I want to thank Raoul Pal of Global Macro Investor and Luke Gromen of The Forest for the Trees for the analytical frameworks I will use below to support my thesis. Click here to continue reading this edition of Crypto Trader Digest – Arthur Hayes, Co-Founder of 100x Group (@CryptoHayes) From BitMEX Research The Blocksize War - Chapters Five and Six The continuation of The Blocksize War have been released on the BitMEX blog. This book covers Bitcoin’s blocksize war, which was waged from August 2015 to November 2017. On the surface the battle was about the amount of data allowed in each Bitcoin block, however it exposed much deeper issues, such as who controls Bitcoin’s protocol rules. The full book is available on Amazon. Half of any profits from physical book sales will be donated to Médecins Sans Frontières, a charity that provides medical assistance to people affected by conflict, epidemics, disasters, or exclusion from healthcare. Latest News from BitMEX BitMEX Announces Official Launch of Partner Programme We have officially launched the BitMEX Partner Programme to more intently focus on expanding the robust network of firms within our ecosystem. Through the programme, we’ll connect our users with trusted tools that will enhance their trading experience while rewarding partners themselves with incentives based on the activity they refer to the BitMEX platform. Zero Overloads on One of the Biggest Trading Days in Our History As Bitcoin and the majority of the top ten cryptocurrencies by market capitalisation dipped in price by 10 percent or more, the BitMEX platform performed exceptionally well with zero overloads despite Sunday being one of our biggest-ever trading days, meaning every order placed during this time was processed. Increasing ETHUSD Swap Risk Limits for Lower Margin Requirements on Large Positions We are increasing the risk limits on our ETHUSD swap – a small but mighty change that will make it even more capital efficient to maintain positions of 50 XBT or more on the product. The increase in the ETHUSD swap risk limits – from 50 to 75 XBT, effective 3 May 2021 at 08:00 UTC – follows our similar tweak on the XBT futures contracts. We heard a lot of positive feedback from our users on that, which is a big reason why we’ve decided to make this change. Further Parameter Updates for a Better Trading Environment Maintaining a fair and orderly trading environment for our users is very important to us, and we’re always thinking about how we can improve further. As part of this effort we’ve implemented two technical but important updates to the Impact Notional and % Fair Basis update methodology, which are two factors related to Mark Price. Social Spotlight No articles in this email should be copied or reproduced in whole or in part. The information contained does not constitute research or a recommendation. Neither HDR Global Trading Limited nor any of its affiliates make any representation or warranty as to the accuracy or completeness of the statements or any information contained in these articles and any liability therefor (including in respect of direct, indirect or consequential loss or damage) is expressly disclaimed. This is not providing any financial, economic, legal, accounting or tax advice or recommendations. In addition, the receipt of this email is not to be taken as constituting the giving of investment advice nor to constitute such person a client of the BitMEX trading platform. This email was sent to <<Email Address>> why did I get this? unsubscribe from this list update subscription preferences BitMEX · Suite 202, 2nd Floor, Eden Plaza · Eden Island · Mahe · Seychelles @media only screen and (max-width: 480px){ table#canspamBar td{font-size:14px !important;} table#canspamBar td a{display:block !important; margin-top:10px !important;} }
  13. style="height: 100%;margin: 0;padding: 0;width: 100%;-ms-text-size-adjust: 100%;-webkit-text-size-adjust: 100%;background-color: #FAFAFA;"> View this email in your browser A Message from Alexander Höptner, CEO of 100x Group It’s been two weeks since the last Crypto Trader Digest and in this short time span, we’re already seeing more history-making moments in crypto. Whether it was Coinbase catching the eyes of millions with its direct listing or another ATH for Bitcoin - the past few days alone have been exciting. These developments will no doubt contribute to many more people considering the possibilities of crypto for the very first time - and that’s a great thing for our industry. A rising tide raises all boats. It’s worth remembering - whether we’re new to this space or of the more seasoned variety - the importance of #DYOR before making investments. This notion and its importance is further delved into by Arthur in the latest edition of Crypto Trader Digest. - Alex (@AlexHoeptner) From the Desk of Arthur Hayes Yes … I Read the Whitepaper (Any views expressed in the below are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.) Humanity’s struggle to locate the easy button permeates all aspects of our existence. In the context of the financial markets, everyone wants to find that expert, newsletter, or secret trading program that if followed will lead to instant, risk-free and above-average sick GAINZ. Intrinsically, we all know that said button is a fleeting chimera one chases at one’s peril – and yet, I continually get asked “What coins should I buy”, “Is now a good time to buy”, “Does technical analysis work”, and on and on. I don’t offer such opinions even to my closest friends lest they erroneously believe I’m the oracle of the Kampong. I recently became involved as a sponsor of the Tampines Rovers Football Club in the Singapore Premier League. A few of the footballers are into crypto and asked if they could pick my brain over lunch one afternoon. The three players had all dabbled in day trading crypto with varying degrees of success. They asked all the standard questions I mentioned above hoping that I could offer the secret to crypto riches over a two-hour lunch. Unfortunately, I disappointed them, and asked them a lot of questions that made them think about why they were investing / trading, how much time they had to dedicate to their endeavor, and what their risk tolerance was. The coup-de-grâce, which served as inspiration for this essay, was when I inquired if any of them had read the Bitcoin whitepaper. None of them answered in the affirmative. The reason the whitepaper is important isn’t because I’m a Bitcoin maxi, but because nearly all other blockchain and crypto projects borrow concepts from and benchmark themselves against ideas presented in that paper. Some projects may not borrow from Bitcoin’s whitepaper directly, but from another project that had borrowed from Bitcoin’s whitepaper (and so on). As a rule of thumb, almost every blockchain or crypto project takes a set of successful and proven concepts from a previous project, and either imitates them or attempts to build on them. The scams imitate poorly and at the surface level. Scamcoins have all the buzzwords and a slick looking website — but if you actually take the time to read even a few sentences of their White or Litepaper, you should be able to instantly recognise that it’s a pile of cow dung (often because it’s either a shameless plate of copypasta, or completely unintelligible). The next 1,000 bagger projects imitate and then improve. Ethereum imitated Bitcoin in many ways, but offered a substantial improvement by creating a virtual decentralised computer that greatly expands the potential use cases for the technology underlying Bitcoin. Don’t you wish you bought some ETH in the pre-sale? I know I do - I publicly called it a shitcoin in a very early edition of this newsletter. Ultimately, any new project needs to answer these fundamental questions to maximise its chances of success: Why are we here at this moment trading this ecosystem of magic internet money? What do we hope to achieve? What about the current financial system are we trying to improve upon or replace? If you don’t have a firm understanding of the “why” and the potential “how’s”, you cannot discern fact from fiction. With an ever expanding universe of digital coins to invest in, without a firm understanding of what the ideal outcome is, you will be at the whim of whatever the search algorithm serves up in terms of coin recommendations... Click here to continue reading this edition of Crypto Trader Digest – Arthur Hayes, Co-Founder of 100x Group (@CryptoHayes) From BitMEX Research The Blocksize War - Chapters Three and Four The continuation of The Blocksize War have been released on the BitMEX blog. This book covers Bitcoin’s blocksize war, which was waged from August 2015 to November 2017. On the surface the battle was about the amount of data allowed in each Bitcoin block, however it exposed much deeper issues, such as who controls Bitcoin’s protocol rules. The full book is available on Amazon. Half of any profits from physical book sales will be donated to Médecins Sans Frontières, a charity that provides medical assistance to people affected by conflict, epidemics, disasters, or exclusion from healthcare. Latest News from BitMEX Enhancing the BitMEX Compliance Programme with Kharon We’ve been steadily enhancing our compliance programme as the crypto derivatives sector evolves. The latest step comes in the form of a new partnership with Kharon, a research and data analytics company, to strengthen our customer due diligence process and enhance screening for OFAC-sanctioned entities and other related parties. Social Spotlight No articles in this email should be copied or reproduced in whole or in part. The information contained does not constitute research or a recommendation. Neither HDR Global Trading Limited nor any of its affiliates make any representation or warranty as to the accuracy or completeness of the statements or any information contained in these articles and any liability therefor (including in respect of direct, indirect or consequential loss or damage) is expressly disclaimed. This is not providing any financial, economic, legal, accounting or tax advice or recommendations. In addition, the receipt of this email is not to be taken as constituting the giving of investment advice nor to constitute such person a client of the BitMEX trading platform. This email was sent to <<Email Address>> why did I get this? unsubscribe from this list update subscription preferences BitMEX · Suite 202, 2nd Floor, Eden Plaza · Eden Island · Mahe · Seychelles @media only screen and (max-width: 480px){ table#canspamBar td{font-size:14px !important;} table#canspamBar td a{display:block !important; margin-top:10px !important;} }
  14. style="height: 100%;margin: 0;padding: 0;width: 100%;-ms-text-size-adjust: 100%;-webkit-text-size-adjust: 100%;background-color: #FAFAFA;"> View this email in your browser A Message from Alexander Höptner, CEO of 100x Group We all have origin stories for how we got into crypto. Swapping these with each other can tell us a lot about the maturity of the space - the more ubiquitous crypto becomes, the more seemingly ‘unremarkable’ these can seem. But we should remind ourselves that getting into a technology (and an asset) this revolutionary is hardly anything to yawn about. It’s telling that a lot of the OGs in our industry got their start in arbitrage. That includes our co-founder Arthur, who in this edition of Crypto Trader Digest delves into what he calls the ‘bedrock of the crypto capital markets’ - the Cash-and-Carry trade. Like every good origin story, this one contains challenges along the way. I hope when you’re reading it, you see some parallels with your own evolution as a trader. Happy reading. - Alex (@AlexHoeptner) From the Desk of Arthur Hayes ALL ABOARD! (Any views expressed in the below are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.) I am an arbitrage trader at heart. In May 2013 brimming with my experience as a delta one trader, I entered the crypto capital markets. The first trade I ever put on was buying Bitcoin from Mt. Gox, depositing them on ICBIT, then selling BTC/USD June 2013 inverse futures contracts at a premium. My first trade captured a premium of 200% per annum (PA). When the futures expired, and my PNL matched my spreadsheet calculations exactly, I thought to myself, holy shit, “Bitcoin is LIT!” This type of trade, called “Cash and Carry,” is the bedrock of the crypto capital markets. The futures implied yields on Bitcoin, USD, and other coins affects all aspects of the market. It is one the simplest and highest risk adjusted return trades one can execute. It also does not entail taking any crypto vs. fiat price risk. Remember, the primary goal of trading and investing is for your portfolio to at least match fiat M2 growth. Essentially, the “Cash and Carry” trade allows you to harvest the structural bid speculators have for crypto and its realised volatility. In various past newsletters and seminars, I harped on about this trade. As there is a lot of new blood in the markets, and my friends who are analogue market professionals still ask about the details of this trade, it is high time for an in-depth, step-by-step guide to “Cash and Carry.” This tome will be filled with amusing stories about my days as a junior sell-side banking trader, the early days of my crypto trading experience, and my thoughts on how to capture yield in the crypto capital markets. THIS IS NOT FINANCIAL ADVICE … I JUST LIKE THIS STOCK! Don’t take my word for it — do your own research, and replicate my examples on an exchange’s Testnet or a spreadsheet. I will use the BitMEX trading platform as a reference point when describing these strategies. They will work across most if not all of the major crypto derivatives platforms. SS Arbitrage I spent a lot of time in the ICBIT chat room. It was a general room where all users could chat. There was a particular user named “SS Arbitrage”. Every time he signed on, he would say “Honk Honk”. I believe it coincided with him selling futures contracts, as his preferred trade was long cash vs. short future to earn the very high basis I just spoke about. In subsequent years, I learned that he is one of the most OG crypto traders. Rumour has it he also paid 10,000 BTC for a pizza. The dude is a legend, and I am glad I got to meet him in the default world a while back. In this bull market, the basis on futures contracts looks extremely high. When my banker friends discover you can make 30% PA doing cash and carry using USD, BTC, and futures their minds melt. If you think 30% is aggressive, imagine 200% back in 2013. I will go into the structural reasons of why basis is highly positive in a flat or bull market later. The biggest dislocation I ever saw was in December 2013 when Bitcoin hit $1,000. China was pumping, and Bitcoin rocketed from $60 in August to $1,000 in December. The March 2014 Future vs. December 2013 Future basis traded at a 100% premium OUTRIGHT. I sold Mar14’s and bought Dec13’s. The trade was delta neutral, but I picked up the price difference between the two contracts. The calendar spread collapsed to flat during January as Mt. Gox started to wobble, and spot began its multi-year bear market. I remarked to another crypto OG trader and former exchange head that I should have bet the house on that trade - and that individual said he went all in on that spread and made beaucoup moneys. I provide this historical vignette to illustrate that crypto basis trading is nothing new, and today’s levels speak to a more mature market. This maturity is the result of an increase in arbitrageurs willing to lend synthetic USD to long speculators. Training Day When I joined Deutsche Bank as a graduate, you had four rotations to find a job, or you were out. They generally had enough slots on the floor for every graduate, but if no one liked you, bye bye. I rotated through the Asian Equity Index Vol, Research Sales, Convertible Bond Trading, and Absolute Strategies desks. I thankfully found a role on the Absolute Strategies desk, which essentially was an Asian equity index arbitrage desk. We traded the difference between the cash basket of stocks and any futures contract listed on top around the region. If there was a BSD of the Deutsche Equities trading floor, it was my boss. He drove a white Lambo, spoke very quietly, and his desk made the most money on the floor at my time of arrival. One day I got him the wrong fruit for breakfast and he pulled me aside and said, “you know why this is important, right?”, I replied, “yes, attention to detail.” I never fucked up the breakfast or lunch order again. DB was making a big push into Asian ETFs, and his desk acquired the mandate to build out the DB X-Trackers product line. I was the grad hired to grow the business. I really didn’t have a deep understanding of the basis trading business acutely until an incident occured a bit later down the line (I’ll get to that in a bit). In 2009, traction on ETFs in Asia was a nothingburger. We launched a series of ETFs on the Hong Kong and Singapore stock exchanges. No retail investors bothered buying them and the only trades we saw were the result of my prices getting arbed by other trading houses. Shout out to Su Zhu of Three Arrows. Before he joined crypto, he used to arb my ass when I got sloppy. In the summer of 2009, I dropped a few hundred thousand USD in a matter of hours because I did not fully grasp the relationship between cash stock baskets and futures contracts. I don’t remember what the political catalyst was, but one morning Taiwan opened strong, and the cash markets traded limit up (7% up over the previous close) within an hour. I had an ETF listed that tracked the MSCI Taiwan Index. I did my usual morning routine, checked the index constituent file to make sure my quoter would produce the right prices on the exchange, and then opened the market. However, I quickly noticed that I kept getting lifted even after the Taiwanese cash market was limit up. I soon had so much short delta that I began trying to buy cash baskets, but I could not because all the constituents were locked limit up. Instinctively, I just started raising my prices, but I kept getting lifted, which meant I got shorter and shorter. The exposure was in the millions of USD of naked Taiwan risk that I couldn’t hedge in the cash markets. I thought “Fuck Fuck, Fuckity Fuck Fuck” I had way too much Taiwan risk and no ability to hedge. I looked around for my boss. He was nowhere to be found, so I frantically ran around the trading floor looking into all the meeting rooms for him. I located him chilling with a bunch of other swingers, and I interrupted them — telling him how much delta I had, and that I couldn’t hedge. He told me to keep raising my prices. I returned to my desk and kept skewing my prices higher. I kept getting shorter. I got back up, went and found him again, and told him the situation. At that point, he followed me back to my desk and I showed him what I was doing. He asked me if I was buying futures contracts, and I said, “No, why would I do that? My hedge is the cash basket.” WRONG.COM I don’t remember if he called me a “fucking idiot” or not. I definitely received that feedback on other occasions due to mispricing. But I was scared shitless. The MSCI Taiwan futures contract in Singapore did not have a 7% limit up provision, so they traded at the true market level. He then instructed me to price my ETF off the fair price of the MSCI Taiwan index as derived from the futures market. The MSCI Taiwan index arb trader gave me his fair every morning, and I would trade my offset in my spreadsheet and adjust my quoter. This chap is also a legend— he is currently one of the head traders of the desk I received a pink slip from at Citi in Hong Kong. Luckily, I instinctively knew that if someone traded against me, I was wrong, not them. After hedging my position in the futures market, the loss was a few hundred thousand USD. I never forgot that painful lesson on the connection between the cash and the futures market... Click here to continue reading this edition of Crypto Trader Digest – Arthur Hayes, Co-Founder of 100x Group (@CryptoHayes) From BitMEX Research The Blocksize War - Chapters One and Two The opening chapters of The Blocksize War have been released on the BitMEX blog. This book covers Bitcoin’s blocksize war, which was waged from August 2015 to November 2017. On the surface the battle was about the amount of data allowed in each Bitcoin block, however it exposed much deeper issues, such as who controls Bitcoin’s protocol rules. The full book is available on Amazon. Half of any profits from physical book sales will be donated to Médecins Sans Frontières, a charity that provides medical assistance to people affected by conflict, epidemics, disasters, or exclusion from healthcare. Latest News from BitMEX Scheduled Temporary Downtime for 8 April (Mainnet) for Upgrades to System Architecture We’re continuously enhancing our trading engine to maintain the BitMEX platform’s excellent performance. As part of our latest initiative to facilitate a major upgrade to our system architecture, we will temporarily halt trading in our production (Mainnet) environment on Thursday, 8 April at 02:15 UTC. Trading will recommence from approximately 02:45 UTC. We successfully completed the same upgrade in our Testnet environment on Thursday, 1 April. Social Spotlight No articles in this email should be copied or reproduced in whole or in part. The information contained does not constitute research or a recommendation. Neither HDR Global Trading Limited nor any of its affiliates make any representation or warranty as to the accuracy or completeness of the statements or any information contained in these articles and any liability therefor (including in respect of direct, indirect or consequential loss or damage) is expressly disclaimed. This is not providing any financial, economic, legal, accounting or tax advice or recommendations. In addition, the receipt of this email is not to be taken as constituting the giving of investment advice nor to constitute such person a client of the BitMEX trading platform. This email was sent to <<Email Address>> why did I get this? unsubscribe from this list update subscription preferences BitMEX · Suite 202, 2nd Floor, Eden Plaza · Eden Island · Mahe · Seychelles @media only screen and (max-width: 480px){ table#canspamBar td{font-size:14px !important;} table#canspamBar td a{display:block !important; margin-top:10px !important;} }
  15. style="height: 100%;margin: 0;padding: 0;width: 100%;-ms-text-size-adjust: 100%;-webkit-text-size-adjust: 100%;background-color: #FAFAFA;"> View this email in your browser A Message from Alexander Höptner, CEO of 100x Group As one of the early movers in the crypto space, we’re committed to more than being a great platform on which to trade - we want to build knowledge of the entire crypto ecosystem, too. This is one of the goals of the newest Crypto Trader Digest, the latest edition of which is below. It’s also the motivation behind the publication of a new book that’s just been released by BitMEX Research: The Blocksize War. While this week’s Crypto Trader Digest focuses on a very modern phenomenon (DeFi farming), The Blocksize War goes all the way into ancient history (2015-17) to examine the contentious and consequential battles that shaped Bitcoin as we know it. You can get a copy now on Amazon or read it chapter-by-chapter as it’s released on the BitMEX blog. While you’re waiting for the book to arrive, we suggest diving into “Poor Wojak’s Almanack” by our co-founder Arthur Hayes. It’s a fascinating dive into the world of DeFi farming that’s just as engrossing and thought-provoking as what you’ve come to expect from Crypto Trader Digest. - Alex (@AlexHoeptner) From the Desk of Arthur Hayes Poor Wojak's Almanack (Any views expressed in the below are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.) I became an avid cyclist after the onset of COVID. I try to ride twice a week for 40 – 60km. Given the popularity of cycling with Boomers, you might think it’s a nightclub for uncles on the public bike paths circa 5am—but it’s a high stakes affair. My top speed hit on a sprint so far is 52 km/h; one wrong move and it’s game over. But aside from exercise, my cycling also gives me some much-needed fresh air to do some of my best thinking. My cycling buddy happens to be a crypto agrarian as well. On a recent ride, we got into a risk management discussion about the types of risk Decentralised Finance (“DeFi”) “farmers” (aka liquidity miners) undertake when putting up their capital. Based on our conversations, I’ve outlined below a quick history on why farming is popular, and a conceptual framework that evaluates the risk undertaken by crypto peasants. Farmville DeFi is an ecosystem of projects that aim to provide financial services to the digital world without the need for centralised financial services providers, such as banks. For example, many DeFi projects allow people to easily borrow directly from other individuals, who lend out their money in exchange for rewards that are built into the network. This has massive implications for the future of lending: no credit check, personal data, or bank account is required. Everyone can participate, and the lending terms are enforced by smart contracts that cannot be tampered with– removing the need for a trustworthy middleman. An example of a centralized intermediary is a bank. In my August 2020 piece Dreams of a Peasant, I spoke about how the DeFi ecosystem is building proto-banks for humanity’s digital existence. As a concept, I am fully on board with eventually replacing all banking and financial services with open-source code. The ecosystem is nowhere close to fully living up to those ideals, but I am betting that this future will eventually come to fruition. Ownership of the projects is open to all, and is based on providing a useful service to the network. Given many DeFi projects focus on some sort of borrowing, lending, or asset swapping, these projects need lenders and market makers that provide liquidity. In order to reward people for lending out their assets the projects mint, per a published schedule, a native token and distribute those tokens to all lenders, typically proportionate to the percent of the total lending pool their funds represent. These tokens each represent a percentage of ownership of the project. If the project is useful, these native tokens or governance tokens will have a non-zero value. In some cases, the tokens may even represent the right to receive a proportional percentage of fees enacted by the platform – e.g., receiving a portion of the trading fees charged by a decentralised exchange whose tokens you hold. Eventually, these tokens will also give tokenholders the ability to vote on how the protocol operates and is governed. Imagine a DeFi bank where the tokenholders get to vote on interest rate loan spreads, and the types of collateral that can be lent against. Or imagine a decentralised asset exchange (e.g., Uniswap, Sushiswap, 1inch, etc.) whose tokenholders vote on trading fee rates. Below is a hypothetical example of a truncated lifecycle of farming a DeFi protocol’s native token. Let’s assume this is a simple protocol that allows borrowers to deposit Ether (ETH) and borrow a fiat stablecoin Tether (USDT). The protocol launches, and would like to offer USDT loans collateralised by ETH. The protocol's governance token is called CORN. 1,000 CORN will be distributed every day for the next 1,000 days. 75% of the daily CORN tokens will be distributed to lenders proportional to the percentage of the USDT lending pool they represent. 25% of the daily CORN tokens will be distributed to borrowers based on their percentage of daily ETH borrowed. Something very important to know: you cannot buy CORN directly from the protocol. You must participate to earn CORN. Once there are CORN in circulation, you may purchase CORN in the secondary market from willing sellers. Therefore, even when you borrow or lend on the CORN farm, you are rewarded with ownership in the protocol. Imagine if you received shares in your Too Big To Fail bank whenever you paid your overdraft fees, or when you paid 20% in fees to cash your government stimmie check because you are too poor to be a profitable client with a real bank account. My mother recounted that this stimmie cashing situation played out in a blighted section of the inner city. A line formed down the block, during the previous height of COVID, consisting of poor citizens who had no bank account, weren’t wearing masks, and paid $200 of fees to cash a $1,200 government check. Disgraceful. As a lender of USDT, you connect your browser’s Ethereum network wallet to the CORN web3 site (a popular wallet is Metamask). You approve the connection, and then elect to stake – i.e., allow CORN to lend out your USDT. CORN will pay you an interest rate in USDT by collecting ETH interest from the borrower, and converting it using a Decentralised Exchange (DEX), such as Uniswap, to convert ETH into USDT at the prevailing exchange rate. All this is done programmatically. If you are a borrower, you again connect your wallet to the CORN platform in the browser. Instead of staking USDT, you stake ETH as collateral and then borrow USDT and pay a continuous rate of interest in ETH terms. To repay the loan and receive your ETH collateral back, you send the USDT you owe to the CORN protocol. The CORN protocol will enforce a minimum leverage ratio based on the external price of ETH/USDT. If, as a borrower, you breach the minimum level, the ETH you put up as collateral is programmatically sold on a DEX. As long as you are lending or borrowing, meaning you have USDT and/or ETH staked on CORN, you are continuously being credited with CORN tokens. The CORN token represents a fraction of ownership of the CORN network, giving its holders voting power to change the CORN protocol and terms of operation, as well as a percentage of interest fees charged to borrowers. The CORN token has a value determined by the marketplace based on the above traits and can be sold on the secondary market for that price. To find the appropriate price you could construct a discounted cash flow (DCF) model that forecasts total value locked-up (TVL) and uses an assumption on the type of fee income for CORN that will generate. Plug in a discount factor, and boom you have a “fair value” for the CORN token. This is why TVL is the most important statistic for any DeFi project. The more TVL, the larger the assumed future fee pool, the higher the token price trades. Because the market is currently so bullish on the future disruption DeFi projects will cause, their tokens are trading at very high non-zero nominal values. Therefore, even if the interest rates are not attractive to potential lenders in and of themselves, the opportunity to generate a token that rises exponentially in price still entices users to stake. The act of staking in order to accumulate platform governance tokens that hopefully appreciate in value is the essence of farming. When you compute the all-in annual percentage yield (APY), the return on your crypto capital dwarfs what you can earn in the centralized “free-market” interest rate markets of traditional finance. That sounds amazing, but there are significant risks undertaken by staking on DeFi protocols. Skin in the Game Understanding these risks—which are largely tied to how secure the code of these DeFi platforms is —is critically important, as there are a few ways in which you could be at risk of losing some or all of your staked capital. While the code for all DeFi protocols is open sourced, most users do not read it. And many (like myself) do not possess the requisite knowledge to discover malicious or poorly-written code because we don’t understand it. Even if you wanted to do extensive code review, the speed at which projects accumulate TVL and appreciate in price punishes those slow to the draw. While you are stumbling through the github, the returns are diminishing. That is chiefly because the number of tokens distributed remains static, so each lender receives fewer tokens as the number of lenders and TVL increases - diminishing the APY. Therefore, ape-ing into contracts without doing any technical due diligence is common and extremely profitable if you are an early mover. The more reputable projects will commission a smart-contract security review by an audit firm. Quantstamp, Hacken, and Trail of Bits are a few of the industry leaders. However, there is so much interest in this space and so few qualified auditors that obtaining an audit from a reputable firm is almost impossible without a connection to the heads of those firms. Here are a few of the common ways to suffer principal loss... Click here to continue reading this edition of Crypto Trader Digest – Arthur Hayes, Co-Founder of 100x Group (@CryptoHayes) From BitMEX Research Book Published: The Blocksize War Abstract: The book covers Bitcoin’s blocksize war, which was waged from August 2015 to November 2017. On the surface the battle was about the amount of data allowed in each Bitcoin block, however it exposed much deeper issues, such as who controls Bitcoin’s protocol rules. Taproot: You Betcha Abstract: In this piece 100x Group grantee Jeremy Rubin describes a smart contract that can be used to verifiably commit to losing coins if Taproot does not activate by a certain date. Jeremy explains a novel and interesting methodology of using smart contracts on Bitcoin, in order to conduct these “bets”. However, in our view, in practise this limited type of betting is unlikely to make a significant contribution to resolving Bitcoin’s apparent softfork activation methodology predicament. Latest News from BitMEX Introducing Bech32 Deposits on BitMEX to Deepen Bitcoin Integration, Lower Fees We’re very pleased to announce the imminent launch of Bech32 deposits across the BitMEX platform, boosting efficiency and deepening our integration with the latest Bitcoin address format. In the coming weeks, we will begin to issue Bech32 addresses to all new BitMEX users and migrate current users to new addresses in phases as soon as possible. Safeguarding the Stability of Our Withdrawal Process Security is the number one priority at BitMEX. In this piece, we provide background on our withdrawal process and how we safeguard it. This includes our manual, multi-signature cold wallet setup to protect customer funds, and the range of behind-the-scenes security measures which are reviewed continuously to ensure our protocols and standards stay world-class. After all, if you’re standing still on security, you’re falling behind. Introducing the TRXUSDT and EOSUSDT Quanto Perpetual Contracts Outside of the list of Altcoin Perpetual Swaps previously announced, which included the EOSUSDT contract, we also launched a TRXUSDT perpetual swap contract with up to 33x leverage. Both contracts went live on 17 March at 04:00 UTC. Social Spotlight No articles in this email should be copied or reproduced in whole or in part. The information contained does not constitute research or a recommendation. Neither HDR Global Trading Limited nor any of its affiliates make any representation or warranty as to the accuracy or completeness of the statements or any information contained in these articles and any liability therefor (including in respect of direct, indirect or consequential loss or damage) is expressly disclaimed. This is not providing any financial, economic, legal, accounting or tax advice or recommendations. In addition, the receipt of this email is not to be taken as constituting the giving of investment advice nor to constitute such person a client of the BitMEX trading platform. This email was sent to <<Email Address>> why did I get this? unsubscribe from this list update subscription preferences BitMEX · Suite 202, 2nd Floor, Eden Plaza · Eden Island · Mahe · Seychelles @media only screen and (max-width: 480px){ table#canspamBar td{font-size:14px !important;} table#canspamBar td a{display:block !important; margin-top:10px !important;} }
  16. style="height: 100%;margin: 0;padding: 0;width: 100%;-ms-text-size-adjust: 100%;-webkit-text-size-adjust: 100%;background-color: #FAFAFA;"> View this email in your browser A Message from Alexander Höptner, CEO of 100x Group Earlier this week, I had the honour of speaking to David Ingles on Bloomberg’s Daybreak Asia. We talked about 100x Group, my vision for BitMEX, and all the current happenings in crypto. If you missed it, you can watch it here. It's an exciting time for the BitMEX platform. We’re in the midst of launching six new perpetual swap contracts for our traders this month, with DOTUSDT and UNIUSDT now live. Next Wednesday, we’ll list ADAUSDT - arguably the hottest Alt at the moment - and XLMUSDT. There’s definitely more to come. Listing the assets that matter has always been a priority for us. We think big because that’s what our users do too. It helps, of course, to always seek out different perspectives to challenge ourselves, remain creative, and stay intellectually stimulated. We have a piece for you today that fits the bill. Here is the latest edition of Crypto Trader Digest from our co-founder Arthur Hayes. - Alex (@AlexHoeptner) From the Desk of Arthur Hayes Pumping Iron (Any views expressed in the below are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.) I used to be an amateur bodybuilder. Sometimes friends who haven't seen me since university remark at how skinny I am. Twice a day workouts and protein shakes were my life during university. Bonus points for anyone who can locate photos from the annual Mr. and Mrs. Penn competitions from 2005 to 2008. The photos used to be on the internet but I can’t find them anymore. The barbell investment strategy resonates uniquely with my past. It consists of constructing a portfolio comprised of beta to participate in the upside, and volatility hedges that compensate and eclipse losses on the downside. This strategy is the simple output of Nassim Nicholas Taleb’s musings about anti-fragility and engineering a life that exhibits positive convexity. Managing to find cheap convexity is quite difficult. You might happen upon it by chance, only to have your vega disappear as time tiptoes forward. That is why entrusting a portion of your wealth to a skilled convexity fund manager is wise. I found such a fund, and the man in charge is a veteran OG trader. Every time I sit down for coffee with him, I feel like I’m getting bashed over the head with knowledge. I usually have to go home and brush up on my option Greeks to fully unpack the knowledge he dropped. Vanna and volga were the terms I recently googled after I got home from our latest meeting. He is plugged into all the major dealing desks and sees structures that most retail and institutional investors will never witness. As he tells me, “we buy what the banks are selling.” The best part is, sell-side traders don’t really care about the long-term implications of the options structures they price because of an annual bonus cycle. If the bank blows up years down the line because of flawed pricing, it doesn’t matter since they got paid cash money years prior. This allows savvy vol funds to buy long-dated structures that are fundamentally mispriced. But everybody wins, so the dance continues. In this world of central bank largess, all institutional money managers are grasping desperately for low risk yield. Therefore banks sell insurance and pension funds structured products with embedded options to enhance yield. The client is always selling volatility. The banks then have to recycle this, so they offload complex structures to sophisticated vol funds. I routinely meet up with the fund manager to chat about his view on the markets. This sojourn to the financial fringes always leads to talk about the ways in which central bank policy is distorting the financial markets and society itself. He is steeped in our age’s economic cannon, as one of his university professors was the US Treasury Secretary Janet Yellen. He formally rejects most economic cannon as poppycock, but his understanding of how the plumbing works allows him to purchase the right long tail hedges. Let Them Eat Cake "In 2021, inflation is coming" – this statement is now common knowledge. Everybody knows, that everybody knows, that inflation will rise this year and into the future. As such, what will the market decide is the asset that everybody should buy to protect their portfolios from the ravages of inflation? I came into the meeting with the fund manager determined to find the answer. After our hour-long conversation, it clicked when he said, “Arthur, you have the perfect barbell portfolio for this age— long crypto (via my interest in 100x), and long interest rate volatility via my fund. I wish I had met you 5 years ago.” We talked about Bitcoin for half the meeting. I asked him if he owned any, and he said no, but he tells all his clients they should own it. To him it is the purest expression of inflation because it is the one asset class that central banks are not directly or indirectly managing through their policy mandate. The next few thousand words will unpack our conversation, and at the end of this essay I hope you come away with the following: The cryptocurrency complex – led by Bitcoin – is the best hedge against hyperinflation because it resides outside of the mainstream financial system. Even the best performing traditional asset will never eclipse the returns of the crypto complex during a period of inflation, simply because all assets in the mainstream financial system are manipulated by central banks so that they do not output the correct inflationary warnings signals. If policymakers decide to try to avoid the end game of hyperinflation, which has historically always been war and/or revolution, they will raise policy rates to push real interest rates into positive territory. That will crush asset values, including crypto. In this scenario, you want to be long government bond interest rates— usually via interest rate swaptions. Both scenarios are extreme, and the actions of global policy makers must be extreme due to the endogenous risk built up in the post WWII Bretton Woods / Petrodollar financial system. There will be no muddle through, it’s either or, and subsequently a violent whipsaw between the two modalities. A Faustian Bargain Our government fiat petrodollar system began in 1971 when Tricky Dick (aka President Nixon) ended the Bretton Woods system by removing the USD convertibility with gold. Then US and Saudi Arabia agreed that if Saudi priced all oil in dollars, the American military would protect the monarchy. Other OPEC nations followed suit, such that oil could only be bought and sold using USD - forcing all other nations to convert to USD on a massive scale in order to participate in what was arguably the most important market in the world at the time. The Petrodollar was born, allowing the US to retain its dominance as the world’s global reserve without having to be pegged to gold. Unconstrained by the straightjacket of the gold standard, all currencies were suddenly floating against one another with no hard money anchor. All types of monetary folly were suddenly possible at a scale unprecedented in the history of human civilisation. With a newfound ability to set short and long-term interest rates at the extremes, central bankers of the major economies embarked on a journey to artificially control business cycles. Every time the economy wobbled, the Fed and its peers cut rates. They never let the system completely reset by forcing losses on those who profited in the boom. The long OECD government bond has been one of the best risk adjusted trades ever since the early 1980’s. Just about every financial titan we worship today enacted a strategy that essentially levered up on long government bonds and rode them onto a 100-meter mega yacht. “Risk Parity” is a prime example. Every time equity vol spikes, I lever up on government bonds. You can call me Ray Dalio and I’ll see you at Burning Man at 10 and Esplanade. The 2019 Roots stage was LIT. Thank you Bridgewater. Latin Debt Crisis – drop rates to save the western banks from dodgy loans made to Central and South America. US Savings and Loans Crisis – drop rates and guarantee bank deposits in S&L institutions that committed fraud in some cases with how they managed company and depositor funds. Russian Debt Crisis / Asian Financial Crisis – drop rates to save western banks and hedge funds from dollar loans made to Russia and South East Asia. Subprime Mortgage Crisis – drop rates to save the financial system from over investment in US subprime mortgage credit. 2012 Euro Crisis – drop rates to save a politically created union with a common currency but not a common government. Super Mario said he “will do whatever it takes”, and he meant it. Corzine was a bit too early in the trade; SFYL MF Global investors. 2013 Taper Tantrum – the Fed Chairman Bernanke tried to take the punchbowl away via signaling that in the future the Fed would allow its balance sheet to naturally shrink as bonds matured. The lack of a constant flow of future wampum caused yields to spike, and the Fed subsequently walked back such inflammatory language. COVID-19 – drop rates and monetise government deficits to fiscally support the economy which governments shutdown in an attempt to halt the spread of COVID. In many cases, these frequent financial crises were themselves caused by central bankers raising rates to normalise or beat off uncomfortably high inflation or financial asset appreciation. Raising rates causes a crisis where the remedy is to drop rates lower than before. Therefore, while all of these crises were painful, they never drove any meaningful changes to how we approach the management of our economies—and the solution to each just sowed the seeds for the next financial flare up. Policy makers oscillate between printing money, which causes inflation, and raising rates, which causes asset losses and/or a financial crisis. 40 years of this back and forth has resulted in almost $20 trillion in zero- or negative-yield government and corporate debt, the lowest interest rates in the last 5,000 years, and the most amount of global debt ever in human civilisation… Click here to continue reading this edition of Crypto Trader Digest – Arthur Hayes, Co-Founder of 100x Group (@CryptoHayes) From BitMEX Research London 2012 – The Second Bitcoin Conference Abstract: In this nostalgic look back into Bitcoin’s history, we go back over eight years, to the London Bitcoin Conference of 2012. This report summarises the talks of the main speakers and tries to capture the radical anti-establishment political viewpoint which was dominant in the Bitcoin community at the time. We also describe some early precursors to technologies such as smart contracts and distributed exchanges, the main development priorities back then, plus the upbeat message given in the 2012 “State of the Coin” address. The Growth of Bitcoin Merge Mining Abstract: In this report we examine merge mining on the Bitcoin blockchain. In the last year or so, on average each Bitcoin block mined contains around two commitment hashes from other blockchains somewhere in the coinbase transaction, indicating that most miners are conducting multiple forms of merge mining. Currently over 90% of the Bitcoin hashrate appears to be engaging in merge mining of one type or another. There has been considerable growth in merge mining over the last few years and this may be of limited concern to some, due to the small potential security risks and increased mining centralisation pressure. Most of these risks could be mitigated away by blind merge mining, if these newer schemes are adopted. Call Me Ishmael Abstract: This report examines the concept of brainwallets and in which contexts they may be useful. As an experiment eight Bitcoin private keys were created, using passphrases from popular works of fiction and other media. All the funds were swept away in a short amount of time and in one case, remarkably, the funds were taken in around 0.67 seconds. The report concludes by arguing that brainwallets may not be a safe way to store coins, certainly not by using popular phrases in published works. Latest News from BitMEX BitMEX Platform Hits US$1 Trillion in 365 Day Volume with Excellent Platform Performance Trading volume on BitMEX eclipsed the equivalent of US$1 trillion over the past 365 days as we recorded two of the highest trading by volume months in our history in January and February 2021. This milestone follows the completion of our User Verification Programme in December, making the BitMEX platform the largest cryptocurrency derivatives exchange with a fully verified active user base. Over US$335 billion equivalent has been traded following the verification deadline. Six New Altcoin Perpetual Swaps Launching on BitMEX in March We’re introducing six new Altcoin/USDT quanto perpetual contracts to the BitMEX platform in March as we expand our product offering and list perpetual swaps for our users’ favourite coins. These will be: Cardano (ADA), Polkadot (DOT), EOS, yearn.finance (YFI), Uniswap (UNI), Stellar Lumens (XLM) 100x Group Provides Third Grant To Bitcoin Maintainer Michael Ford 100x Group is delighted to announce our continued financial support to Bitcoin Core maintainer Michael Ford. We’re proud to announce a third grant to Michael, of US$100,000, bringing our total financial support to US$250,000 over three years. Social Spotlight No articles in this email should be copied or reproduced in whole or in part. The information contained does not constitute research or a recommendation. Neither HDR Global Trading Limited nor any of its affiliates make any representation or warranty as to the accuracy or completeness of the statements or any information contained in these articles and any liability therefor (including in respect of direct, indirect or consequential loss or damage) is expressly disclaimed. This is not providing any financial, economic, legal, accounting or tax advice or recommendations. In addition, the receipt of this email is not to be taken as constituting the giving of investment advice nor to constitute such person a client of the BitMEX trading platform. This email was sent to <<Email Address>> why did I get this? unsubscribe from this list update subscription preferences BitMEX · Suite 202, 2nd Floor, Eden Plaza · Eden Island · Mahe · Seychelles @media only screen and (max-width: 480px){ table#canspamBar td{font-size:14px !important;} table#canspamBar td a{display:block !important; margin-top:10px !important;} }
  17. style="height: 100%;margin: 0;padding: 0;width: 100%;-ms-text-size-adjust: 100%;-webkit-text-size-adjust: 100%;background-color: #FAFAFA;"> View this email in your browser Crypto Trader Digest: February 19, 2021 A Message from Alexander Höptner, CEO of 100x Group We’re nearing the end of February 2021 and thanks to our loyal users and all the hard work from everyone at the BitMEX team, we’ve had a very successful start to the year. We are now the world’s largest crypto derivatives exchange with a fully verified active user base, and the platform performed exceptionally well during the extremely volatile trading we’ve experienced this year. We also recently expanded our product offering with the listing of DOGE, and we have more contracts coming your way very soon. There has been unprecedented interest in the crypto world as ATHs have been printed. So with this surge of interest, what better time to reintroduce something a lot of our users have been asking about? I’m very excited to present to you the latest edition of Crypto Trader Digest – right from The Desk of Arthur Hayes. And, as always, we’ve included some recent BitMEX Research and BitMEX news articles here too. Look out for further Crypto Trader Digest insights in the coming weeks and months. - Alex (@AlexHoeptner) From the Desk of Arthur Hayes Walkaway Can't Stop, Won't Stop, GameStop!!!! Stonks for the long run. My hiatus from the equity markets ended when I too became sucked into the meme stock vortex. Seeing a meme stock like GME log a ten bagger in a few trading sessions will get any hardened market operator on their feet. I could not resist the YOLO urge. When things started heating up, I located my previously set up Robinhood account to ape in. I have a human broker as well, but I don't even want to know what egregious commissions they charge me to execute cash equities. (It's definitely more than the amount Robinhood - read: Citadel - legally front runs my orders by, that's for sure) On the evening of Jan 28th, (Asia time zone) I attempted to buy some GME short-dated, out-of-the-money call options. Mon Dieu! Robinhood had shut down trading in the “meme” stocks (GME, NOK, AMC and BB). I don’t know what’s worse, when a snowboarder stomps all over the traverse in the backcountry, or not being able to trade my favourite stonk on the platform that is supposed to democratise securities trading. I thought I understood how equities settled in the US, but I learned a lot over the ensuing weekend. TL;DR on the Robinhood and other discount broker outages: Brokers must post margin with the Depository Trust & Clearing Corporation and National Securities Clearing Corporation at the end of each day to ensure enough funds are reserved to cover any trading losses. The “meme” stonks’ volatility skyrocketed, which meant that the clearing organisations could ask for more collateral from brokers on the grounds of needing to protect themselves from additional potential risk when settling the brokers’ trades. It takes two business days to settle stocks in the so-called digital age… Robinhood in particular was told to come up with $4 billion, or they would not be able to facilitate any trading the following day. RH, apparently not having that much cash on-hand, said, “how about we stop trading or severely curtail trading in the stocks that are causing PAIN to various masters of the universe?” The clearing houses said, “OK, in that case, you would only need to post $700 million.” RH agreed to that figure, rushed to raise more money from the Street and/or Silicon Valley, and then subsequently shut off trading on Jan 28th and into the weekend. (This is information gleaned from an interview the CEO of RH gave to Elon Musk on Clubhouse). Naïve little me assumed that if I was buying equities or paying an option premium with cash in-full, there would not be a broker-level margin concern. I just didn’t understand the rules of the game, nor did most of RH’s “customers” (a reminder that you ain’t really the customer if you don’t pay for the service, you is the product son!) The game masters just didn’t like how the game was being played, so they jacked up margin to force a course correction. I’m no stranger to janky settlement issues in equities markets. My first trading book was in Vietnam. If you think the US market is sketchy, the Vietnamese stock exchange circa 2009 was a beauty. I literally faxed my orders into my broker every day. A fucking fax. The only person I know who still uses a fax is my mother. Then, if my order was large, my broker (I surmise, but cannot prove) would front run my orders. In Vietnam, on a given trading day you had to choose whether you were buying or selling. That means if I bought 1 share, I could not sell it until the next trading day. Then I had to sell USD and buy Vietnamese Dong —so I would call the spot currency dealer to buy the Dong so that I could settle on time. (I’ll let the reader fill in the blank with their pun of choice). I have experienced the joy of dealing with many equity markets and their esoteric rules around settlement. These rules don’t really seem to matter— until they do, and when they do it’s usually to your detriment. Back to the US discount brokers. After that fiasco, all hell broke loose in the financial media. The long punters cried foul. They said the game was rigged, and it wasn’t a free market. What they failed to understand was that the rules of the game didn’t change, they just didn’t understand the rules. Now that you know there is a cabal of organisations that can effectively shut off access via unilateral increases in margin at the broker level, do you want to play this game? It’s not a moral or political argument. Now you know the rules, what are you going to do? Retail vs. Institutional Traders The foundation of the modern capital markets rests on a bifurcation of how financial products and services are offered or sold to retail vs. institutional investors. Most of you reading this essay are classified as retail, even if you are quite wealthy. In most jurisdictions, you need liquid assets in the low single digit USD millions to graduate from the retail to institutional moniker. But even then, unless you are slinging billions per year in flows, you will receive a much worse service, pay higher fees, and have less access than large money managers. On the trading floor, if you ever heard the client was private wealth, you knew it was payday. These people were wealthy and they still got shown spreads you could drive a Tesla truck through. Before the internet, there actually was a huge disparity in information and understanding of financial products between the wealthy and the plebes. Before the smartphone and high-speed internet, you might have to physically receive company annual reports. To price complex derivatives would take hours or days, and necessitated access to immensely expensive computing resources. Thus, financial regulators around the globe wanted to ensure that retail investors did not get burned due to their information and computation deficit vs. large funds and financial intermediaries. But currently, the information and computing playing field is completely even. With an internet-enabled smartphone anyone can price an esoteric option or get immediate access to the latest financial updates from any company. Most financial research is given away for free these days, and the ability to communicate efficiently via online messaging boards such as Reddit’s r/wallstreetbets encourages interested parties to engage in intelligent conversation about securities and trading strategies. However, retail still is not allowed to access many markets directly. They must go through regulated brokers, and they can trade only a subset of the financial products available to institutional investors. By funneling retail through dumb slow pipes, dumb mutual funds / ETFs, and dumb beta chasing 2 and 20 charging “active” managers, the system enriches the financial intermediaries and the institutional investors. That is the architecture of the modern financial system. Can it change? Absolutely. How long will it take? I don’t know, but I hope you like to watch paint dry. These are the retail vs. institutional rules of the game. If you don’t like them, your first option is to quit – and your second is to find another game altogether. Opt-Out Retail traders in aggregate supply the cannon fodder for Hamptons pads, Monaco F1 jaunts, and 100,000 GBP bar tabs at The Box. But they still are treated like children and chastised when they “act up”. The rules of the game could not be clearer– and if you don’t like them, walk off the field. Withdraw all your money from your broker. Stop trading. Stop paying the system that you believe treats you like a second-class citizen. That is opting out, and it is extremely powerful and liberating. The American Civil Rights movement showed the power of opting out when black folks who were told to sit in the back of the bus but paid the same fare as everyone else, decided to forgo public transportation and carpool instead. The loss of income to the public bus companies forced Southern cities where the black population was significant to quickly reverse the discriminatory policy. When economic pain met racism, racism was defeated. It is, and always was, about the money. If you want to buy and hold stonks through your broker, do it. Just make sure you have a cash account, use no leverage, and refuse to lend out your shares unless you receive the borrow interest. Given you have the same information as the pros, what’s the point of paying management fees to them when you can do it yourself? Want to create a thematic basket of stocks? That is so easy now that many brokers offer fractional shares. These sorts of activities do not benefit the system in aggregate. If you aren’t borrowing money or constantly crossing the bid / ask spread, you are not a profitable customer. The constant buying and selling of securities hands fees directly to the people you may claim to be rebelling against. This is where you are at a significant disadvantage due to the way the game is set up. Trading is fun. I love it. The hormonal changes in your body when you are in the flow state keeps you coming back for more. If you are drawn to speculation for the thrill, or for the more common and depressing reason that it represents one of the only avenues left to augment your wage cucking in the hope to pay off student loan debt, medical bills, and or purchase your dwelling, there is another playing field ready to welcome you. What if there was another game, where the baseline assumption was radical transparency in accordance with the spirit of the open-source technology movement? What if there was another game where the financial intermediaries actually competed with each other to offer transparent, affordable, and fair access to all participants regardless of their net worth? What if there was another game where if you didn’t like the rules, there was a technology protocol at your disposal to create services from scratch that better served the needs of yourself and or your target client base? The Other Game That system started on Jan 3, 2009 with the Bitcoin genesis block. Today that game is called the Crypto Capital Markets.Erected upon the bedrock of open source, this new Crypto Capital Markets game promises an open, permission-less way to move data / value around society. The playing field is cyberspace, and anyone with an internet-enabled device can play. After slightly more than a decade, the total market cap of all cryptos has breached $1 trillion. Centralised and decentralised exchanges trade deca USD billions of notional per day. For a retail trader looking to play a new game, this market appears promising. It’s risky for sure, but if your goal is to speculate your way out of COVID lockdown induced boredom, or to augment your declining real wages, crypto can and does generate such outcomes. It also, similar to traditional markets, could morph into a pit where your money and resources are set ablaze. But, because the starting point is a radically transparent way to move value from point to point, trying to prevent the discovery of negative outcomes requires obfuscation, opacity, and evasiveness. The community is filled with legions of honest and well-meaning contributors who delight in pointing out bad actors, who they then pressure by challenging them to be radically transparent. Tell us your rules, publish them front, center, and in bold letters for all to see. Let no plebe use the excuse that they didn’t know or couldn’t learn about the platform, token, coin, crypto, etc. that they interact with. This market assumes that participants take responsibility for their decisions, and in return offers a level playing field. There certainly are experts and thought leaders, but their moxie emanates from independently verifiable statements about their subject matter. You don’t get to be an expert in crypto because your surname contains the right vowels, or you happened to be highly credentialed. Respect follows results, not the other way around. It always helps to possess social capital, but if you ship shit code, the world will know because it is peer reviewed. If you want to charge management fees for performance, we can query your wallet balances on the blockchain and determine if you are just a beta bro or an omnipotent omega operator. The ecosystem attempts to operate in a trustless manner. That is an ideal— in practice, there are many trusted financial intermediaries such as exchanges, wallet providers, custodians, etc. that are widely used across the market. However, the community is always attempting to strip them of their trust rent-seeking income by building scalable decentralised services to destroy the centralised ones. Centralised services certainly provide positive value to the ecosystem. In many cases, they use their profits to invest in the decentralised solutions that could render parts of their business obsolete in the future. But the constant pressure to remove trust spurs the centralised operators to provide superior services to their customers faster than a decentralised provider. I should know, my wealth is directly tied to a centralised trading platform. BitMEX needs to constantly adapt, evolve, and provide a better user experience (not to mention maintain its security record and platform performance) to keep growing and generate earnings in the future. I just spent a few hundred words spewing lofty ideals about the mindset of the Crypto Capital Markets. I did not provide many specifics to elucidate clearly why you should opt-in. In subsequent essays I will dive into the differences between the two games. As the traditional financial game is adjudicated and participants feel raw with the surfeit of perceived inequalities, I will in plain language demonstrate why that behaviour can’t or wouldn’t persist in the Crypto Capital Markets. Do not despair, the game is the game. You just need to know which one to play to maximise the financial well-being of yourself and your family. Until next time, Gil Scott-Heron said it best: You will not be able to stay home, brother You will not be able to plug in, turn on and cop out You will not be able to lose yourself on skag And skip out for beer during commercials, because The revolution will not be televised - Arthur Hayes, Co-Founder of 100x Group (@CryptoHayes) From BitMEX Research January 2021 Cryptocurrency Exchange Review (From CryptoCompare) Abstract: In this piece, BitMEX Research delves into key market insights, including new daily volume records set on the 11th of Jan and CME setting a record number of monthly BTC futures contracts traded and maintaining the highest open interest. Progress Towards Utreexo Goals Abstract: 100x Group grantee Calvin Kim explores several claims about the benefits of Utreexo and the extent these advantages have been realised. Calvin explains the significant progress which has been made in the latest implementation of Utreexo, however there is plenty of additional work to do before ordinary users will be using the technology. Bitcoin Miner Transaction Fee Gathering Capability Abstract: In this report we discuss a new proposed mining pool, expected to censor certain transactions. This may result in a detectable diversion from the typical revenue maximisation transaction selection policy, which forms the basis of our analysis. Using the Bitcoin Core command “getblocktemplate”, we generated Bitcoin candidate blocks without doing any hashing, conducting this every 20 seconds for a two week period and recording the results in a database. We used multiple versions of Bitcoin Core and newer releases of Bitcoin Core experienced a 40.3% fee income improvement, when compared to a 2015 version. We also benchmarked our results against the real Bitcoin network and we were able to beat the real Bitcoin miners by generating 0.15% more in hypothetical fee income. This type of analysis may eventually be helpful in detecting miner censorship and determining whether Bitcoin’s censorship resistance property is a universal property of the system or merely a consequence of the transaction fee premium. Latest News from BitMEX Introducing the BitMEX Principles for Data Storage in the Travel Rule Era June 2021 will be one of the most important dates this year for the crypto space – the date by which the global anti-money laundering and terrorist financing watchdog, the FATF, expects the crypto industry to implement the so-called ‘travel rule’. We’re pleased to release the BitMEX Travel Rule Data Storage Principles as a starting point for discussion from which all stakeholders can provide input. In the spirit of open discussion, we have released the Principles as non-copyright open source, in the hopes that it sparks debate and collaboration between regulators, industry, and interested users. Real-Word Trading Benefits of BitMEX Index Protections Introducing the BitMEX Principles for Data Storage in the Travel Rule Era We’ve explained how our strengthened index protection controls can give BitMEX users an edge versus those who trade on exchanges with less sophisticated safeguards. In this piece, we showcase a real-world benefit of one of those safeguards – the Index Protection Parameter – kicking in during trading for .BXRP and .BXRPXBT indices on Monday, 1 February. Social Spotlight No articles in this email should be copied or reproduced in whole or in part. The information contained does not constitute research or a recommendation. Neither HDR Global Trading Limited nor any of its affiliates make any representation or warranty as to the accuracy or completeness of the statements or any information contained in these articles and any liability therefor (including in respect of direct, indirect or consequential loss or damage) is expressly disclaimed. This is not providing any financial, economic, legal, accounting or tax advice or recommendations. In addition, the receipt of this email is not to be taken as constituting the giving of investment advice nor to constitute such person a client of the BitMEX trading platform. This email was sent to <<Email Address>> why did I get this? unsubscribe from this list update subscription preferences BitMEX · Suite 202, 2nd Floor, Eden Plaza · Eden Island · Mahe · Seychelles @media only screen and (max-width: 480px){ table#canspamBar td{font-size:14px !important;} table#canspamBar td a{display:block !important; margin-top:10px !important;} }
  18. 0.21.0 Release Notes Bitcoin Core version 0.21.0 is now available from: https://bitcoincore.org/bin/bitcoin-core-0.21.0/ For the full release notes refer to: https://bitcoincore.org/en/releases/0.21.0/ View the full article
  19. style="margin: 0;color: black;"> View this email in a browser BitMEX Crypto Trader Digest August 27, 2020 From The Desk of Arthur Hayes, Co-Founder & CEO, 100x Group Dreams of a Peasant (Source: The Grapes of Wrath - 1940) I lack access to nightclubs and most other forms of revelry; therefore, I decided to become a crypto peasant. I’m farming the latest and greatest shitcoin DeFi projects. While I deride many of these projects as activity resulting in economic waste, there is an underlying proto-banking infrastructure that is being built on the rails of Ethereum and other protocols. Let this be my first treatise into the what drives demand and supply of crypto credit and the institutions that are being built to service these needs. The Demand for Crypto Credit There are only two use cases that I would lend against. Miners who borrow fiat (usually US dollars or Renminbi) to pay for electricity, rent, and salaries. They collateralise these loans with their mining machines and/or on balance sheet Bitcoin or Ether. Speculators that need fiat or crypto to trade with leverage. To short specs need to borrow the shitcoin itself, or to go yolo long they usually need dollars. These loans are usually not collateralised. The specs pay so much in fees, it behooves the trading platform to lend them capital. Even if many blow up, trading platforms with proper margin call protocols will be able to protect their capital. Why can’t a small business or individual crowded out of the fixed income markets due to crony capitalism use the crypto capital markets instead? Borrowing Crypto: Currently there are no industries where the entire value chain from producer to consumer pays entirely in Bitcoin. Imagine if you could only buy bottles of Dom P in Bitcoin. That would mean the French producer paid for their inputs in Bitcoin, the wholesaler paid the producer in Bitcoin, the nightclub paid its distributor in Bitcoin, and the end bubbly water consumer paid in Bitcoin as well. If your cost of production is not natively in Bitcoin, it is foolish to price your good in that currency. It also means that your cost of capital should not be in Bitcoin. When this becomes reality, then it will be possible to lend to actual businesses in Bitcoin. Personal loans are also not possible in Bitcoin. The proletariat (yeah that’s you, just because you wear business casual on your Zoom call from the waist up doesn’t mean you aren’t a replaceable cog in the service economy) earns fiat. There are many who would gladly take a Bitcoin loan at a low interest rate, but if the price of Bitcoin rises, they earn cheap but have to pay back expensive. That is a recipe for bankruptcy and NPLs. Borrowing Fiat Stablecoin: It is absolutely feasible for an SME to borrow Tether or another near USD equivalent stable coin. However, outside of our little sandbox, not many vendors accept USDT for payment. Therefore, the borrower would borrow Tether, exchange it for USD (paying fees), then pay for the goods they need. At redemption, they would need to conduct the reverse, exchange USD revenue for Tether (paying fees), and then repay their Tether loans. While this is definitely doable, it isn’t easy. You might think it is, but that’s because you are in a crypto bubble. The bigger problem is that there are no proto-banks set up to conduct proper credit analysis on SMEs entirely over the internet across multiple legal jurisdictions. That is hard work, and risky. It’s what banks used to do, before central banks crushed the yield curve. Better to lend to people and companies whose debt is guaranteed by a central bank, than take actual risk lending to productive SMEs. If you are borrowing a stablecoin as an individual, you probably have exhausted all other options. Credit cards, personal loans, home equity loans etc. while expensive, are available. If you live in a place where the credit conduits are so broken, or your credit is so bad these products are not available to you, the person lending you a stablecoin is going to learn the meaning of adverse selection the hard way. For those of you whose brains have shrunk from too much TikTok, let me summarise. I will lend fiat to miners because they have an asset that produces the most liquid and largest market cap cryptos Bitcoin and Ether. I would also lend them Bitcoin or Ether to purchase machines because the machines also produce Bitcoin and Ether. I will lend to individual speculators of trading firms inside my own walled garden. I know they will generate fees by trading on leverage, and I know that I can call my loan back through the margin call process. I will not lend to SMEs in either crypto or fiat stablecoin. SMEs’ revenue and expenses are in fiat, their cost of capital must also be in fiat lest the price of Bitcoin rises. I lack the ability to do proper credit scoring, nor is it easy to use a stablecoin outside of the crypto capital markets. I will not lend to individuals in either crypto or fiat stablecoin. Individuals who live in places with zero legal protections for foreign lenders, or have such shitty credit that none of the standard commercial banking credit products are offered to them are terrible debtors. The Supply of Crypto Credit Bitcoin and Ether Hodlers You know who you are. You ain’t selling no matter what the price. However, while you are chilling in the basement waiting for Bitcoin to hit $20,000 and Ether to hit $1,200, you would like to earn some yield. Your biggest worry when custodying your crypto with third parties is whether they can actually keep it secure. If you are a mETH head, you also worry about sloppy solidity code rendering the smart contract inaccessible, and your funds go poof! You trust no one, just code. You don't trust much code either. You assume that anyone borrowing these funds from you is going to do a runner. If you have been playing in this sandbox long enough, you have seen and experienced all sorts of scams and transacted with all sorts of licentious rakes. As a result, you will only lend to very large and well-known platforms (large exchanges, large miners, large proto-banks). Even if these platforms do not provide you collateral, they make so much money from their business activities that not paying you back would do immense damage to their reputation. A positive reputation in this ecosystem is essential. We don’t have a national government forcing its citizens to use our services even when we lie, cheat, and steal from them. Banking licenses are great things if you can get one. Bad behaviour occurs in crypto capital markets, but the scale is tiny, and you can’t behave that way too long before the word is out on social media and your customers flee. Fiat Stablecoin Lenders Back when I started trading Bitcoin in 2013, the 2nd best risk-adjusted, zero price delta trade was to lend USD at the FRR on Bitfinex. The rate sometimes approached 1% per day. I knew many people who wired their dollars in, deposited on the Bitfinex lending markets, and earned a phat yield. What was number one? The number one best risk adjusted, zero price delta trade was cash and carry. The futures basis routinely was over 200% PA. I get hot and bothered with the basis jumps above 5% now. These days for those seeking to earn more than 0% or negative in Europe and Japan, take their dollars, buy Tether or another fiat stablecoin, and stake it somewhere. As much as we like to shit on the USD, the crypto capital markets like the rest of the world are intrinsically short the USD. Remember that the blockchains that support a multi-centa-Billion market cap use energy. Energy is priced in USD. Therefore, miners must find USD by selling mined crypto, or borrowing against their crypto. Speculators are usually net long. To get net long you need to borrow fiat to purchase more crypto. A note on why speculators are net long. Bitcoin and other shitcoins can only fall to zero. But the upside is infinity. Cryptos are also insanely volatile. When you combine high volatility, unlimited upside, and limited downside you have an attractive call option. Therefore, as a speculator you should always look out for what to buy on margin, not sell. You aren’t guaranteed to make money, but you give yourself the best odds to succeed. As savers buckle under zero and negative rates, they will become risk seeking with their capital. The crypto capital markets are the best place to earn serious positive yields if you are willing to take some modicum of risk. The Intermediaries We have demand, we have supply: let’s dance. What types of players stand in the middle and collect the crumbs? Exchanges The exchange business when done well at scale in crypto is very profitable. While traders pay low to zero fees to execute spot trades, they always pay for margin. Therefore, the more capital that can be funneled to risk-seeking speculators, the more trading volume, the more fee income. Exchange free cash flow (FCF) should be given to speculators at a price in order for them to trade more. At a certain point, the amount of capital desired by speculators will eclipse what the exchange can provide. At that point, the exchange will solicit capital from others. Exchanges custody billions of dollars worth of crypto. As a depositor you trust that the exchange will secure it properly and not steal it. You implicitly trust the operators. Bad news spreads rapidly on social media. Any hint that the exchange is not a good credit, could metastasize into an exodus of depositors. Traders with zero balances don’t pay fees. Exchange operators must maintain pristine reputations in the eyes of the community. The largest exchanges have the most to lose by stealing. Therefore, when they say I will pay you 1% a month to deposit USDT with me, you believe they can pay interest and principal. The exchange is the cheapest of all the intermediaries I will talk about because they have the most to lose by cheating. The exchange will then take that 1% per month capital, and lend it to speculators at 10bps per day as an example. If the exchange gets 100% take-up, they make a spread of 2% (10bps * 30 days – 1%) per month. They also get to charge trading fees as speculators churn their books. The largest margin trading platforms all have schemes to raise assets with which to on-lend to speculators. Lending Platforms These platforms don’t own an exchange, and therefore do more traditional banking functions. They don’t have an intrinsic, profitable use case for the capital raised, so they match lender and borrower. Popular platforms such as BlockFi, Genesis, RenRenBit, Babel Finance, and MatrixPort conduct this business. In the retail market, they offer very attractive rates for crypto and stablecoins. These are uncollateralised loans. In the OTC market, they will bid for size blocks of different coins depending on where they have massive demand and supply imbalances. These large trades tend to be collateralised. This market is very nascent and will be immensely important as the demand for credit in our ecosystem expands. This is the precursor to a well-functioning repo market where institutional lenders and borrowers can transact purely on trust. The borrowers are the following: Miners who need to tender Bitcoin or Ether for fiat. The lending platform will demand over-collateralisation to protect their depositors. A typical structure is a borrower can borrow 50% of the USD value of their Bitcoin. If the price of Bitcoin drops 30%, a margin call is issued, if the price drops further without a collateral top-up, the Bitcoin collateral is liquidated. This flow is part of the reason why the March 13th sell-off was so vicious. Bitcoin and Ether collateral had to be liquidated to protect depositors. Hodlers who need fiat liquidity. Living the high life still requires a decent amount of fiat. Hodlers wishing to move out of the basement into better digs need to come up with statist ducats. These borrowers will also overcollateralise similar to miners. Exchanges need more deposits to lend to speculators. In a bull market, speculators will pay ridiculous rates because the assets they trade are appreciating so quickly. The exchanges will approach other intermediaries and borrow crypto or fiat to use on their platform. Because of the reasons mentioned above, exchanges are such good credits that they will usually not provide any collateral. Large trading houses are always on the lookout to use other people’s money to enhance returns. It is still very capital intensive to trade across all the major exchanges. Given the best shops also trade in the traditional markets, the crypto traders are always battling for more capital from the head office at reasonable rates. I know that some shops' traders get face ripped by their internal treasury desks. Some shops will provide USD as collateral to obtain crypto. Some shops, because of how established they are, can borrow without collateral. These lending platforms are the closest thing our ecosystem has to banks. They bid for deposits by paying high rates of interest. They conduct credit analysis on borrowers, determine how much leverage to extend, and call loans to protect their depositors. For their efforts, they earn net interest margin (NIM). Where these platforms differ from traditional commercial banks, is they cannot expand the money supply in the crypto capital markets. They conduct fully reserved banking. They can only loan funds equal to their deposits. These platforms could create their own token and attempt to convince the market this token has a claim to income of the lender. This token could then be used as a cash equivalent on exchanges or to pay for crypto goods and services. If only someone was that audacious to mint currency out of thin air, and convince the market it was worth more than zero… I think you know where this is going. I’m A Fucking Farmer – The DeFi Proto-Bank Why not “decentralise” the functions of a lender? Why not create programmable finance? Why not have this borrowing and lending activity all live on blockchain and be completely transparent? This is the dream. Various projects took up this challenge and created a whole ecosystem of dApps that attempt to perform the functions of a bank in a decentralised and trustless fashion. Here is a very simple example of a DeFi lending project. There are so many more beautiful flavours, but let’s keep it simple: Select your protocol on which to build your DeFi bank. The most popular choice so far is Ethereum. That means the project using the ERC-20 standard. Create a smart contract where users can deposit a select number of ERC-20 tokens and earn yield. The most popular tokens are wrapped Bitcoin (e.g. WBTC, renBTC), ETH, DAI, USDT, USDC etc. Create a smart contract where the borrower can deposit collateral. E.g. I want to borrow ETH, so I will overcollateralise with WBTC. I deposit my collateral into a smart contract, and out the other side I receive ETH into my wallet. If the price of ETH/BTC rises (ETH is worth more Bitcoin), my WBTC collateral is liquidated on a decentralised exchange (Uniswap is all the rage right now) and ETH is returned to the lender. I can keep my ETH, but I have lost my WBTC collateral on the other side. The project either takes a fee in the form of a cut of the interest, or a fee for just arranging the trade. a. The platform also issues their own native token and the only way to earn it is to participate on the platform as either a lender, borrower, or both. This business model is that of a proto-bank engaged in fully reserved lending. Loans Outstanding <= Deposits. The part that makes this interesting is that it is programmable finance, where the owners are those who actually use the service. Contrast this with a typical bank where common stockholders are governments, large asset managers, and some retail investors. Ownership of equity is conferred through purchase of shares, rather than by usage of the service. Tokenomics (you know, "The Economics of Tokens", it’s going to be a new major at Wharton taught by Dan Larimer) is fascinating, and where the activity known as yield farming originated. Using the above example, I create a fixed supply of tokens and the only way to earn these tokens is to engage in borrowing or lending. You can of course purchase them in the open market from holders who wish to sell. The token has the following attributes: All fee income to the project is passed onto the token holders net of OPEX costs. Token holders can vote by submitting improvement proposals and vote via staking their token. Here are some things that holders can vote on: a. OPEX costs - the biggest cost for an ERC-20 token is the Ethereum network’s gas fees. b. A list of approved uncollateralised borrowers. E.g. Token holders could vote to allow an exchange the ability to borrow against depositors at the market clearing rate without collateral. c. Leverage ratios for collateralised lending. d. Fees charged by the platform. The next question is how do you value such a token in the open market? As a holder of the token, I earn a yield denoted by the following formulas: My Yearly Token Income = # of Tokens I hold * [Fee Income / Total Supply of Tokens] My Token Yearly Yield = My Token Yearly Income / [Price Paid per Token * # of Tokens] Let’s say that yield was 5%. Ignoring the risk that the smart contract is constructed poorly, I must evaluate this investment against something similar. If all loans are at least fully collateralised I don’t have to worry about the credit quality of the loan book. I am also assuming I can sell collateral in the event of a margin call with no market slippage. That means the security I should evaluate my earnings against are US Treasuries. The US Government can print money at will, so in USD terms it is risk free. There is political risk that they decide not to print money to payback holders, but barring that, it is risk free in nominal USD terms. We are not talking about the purchasing power of the USD after rampant M2 inflation, just the fact that if you lent $100, you get back $100. Short term (<2 years) US Treasury securities yield slightly more than 0%. Therefore, investing in a token that yields >0% is a better use of your capital. The risks to your investment in this DeFi proto-bank are the following: The lower the amount of assets locked in smart contracts, the lower the potential fee revenue. Therefore, if after you purchase the token, the AUC declines, your anticipated yearly fee income will be insufficient to generate enough yield. The loan book takes impairment. If all loans are at least 100% collateralised, that would mean that when attempting to liquidate collateral, market liquidity did not allow the protocol to recover all the value of the lent currency. E.g. You borrow $100 USDT against $110 worth of WBTC, the price of WBTC falls 10%, the protocol liquidates WBTC against USDT and is only able to recover 90 USDT. Now the loss of 10 USDT must be taken from the pool of retained earnings, or depositors must receive a haircut proportional to their % in the total deposit asset pool. If the loan book lends to certain perceived high-quality credits like exchanges with less than 100% collateral, that borrower could default. A similar sort of income or principle impairment would occur similar to point 2. A crypto bank robbery happens. That is the result of an intentional or unintentional bug in the smart contract code that syphons assets out of the project, or they become inaccessible. This is the bull case for your yield to rise in the future: The protocol is able to gather more and more AUC, thus increasing the potential fees earned. The token holders vote on appropriate credit policies that allow for the extension of credit that is not 100% collateralised at an acceptable risk level. That means that the default impairment cost is less than the interest income earned from these riskier activities. The majority of DeFi projects require staking and some sort of uneconomical activity. As a reward for your participation you are able to farm a token created out of thin air with dubious ownership claims to any potential income stream of the project. The memes are hilarious (YAM, BASED, etc.), and the fact that these tokens are worth more than zero is a testament to the financial repression hoisted upon savers by the all-powerful central bankers. When faced with severe income inequality, and free money (for the fortunate), financial speculation will surge. Would you rather work for 30 years for stagnant to negative real income gains in service to a mega-corporation, or would you rather come play in the intellectual casinos that are the financial markets? At least at the casino you can visualise yourself hitting it big quickly. I imagine many “essential” workers are just so happy they can serve humanity for below average wages. Against this potentially dystopian backdrop where greater than 50% of the population is on some sort of basic income, trading worthless memes under the guise of innovative technology ceases to be so daft. The Holy Grail of Bitcoin For Bitcoin to be true money, the cost of capital for certain businesses and individuals must be priced natively in Bitcoin. Any linkage to a fiat currency relegates the Bitcoin capital markets to be perennially short US dollars. All points in the value-added chain of goods production must be able to borrow cheaply in Bitcoin. The current miner and speculator use case for crypto and stablecoin fixed income products is a great first step. This demand laid the groundwork for the rise of DeFi yield farming. While the majority of activity is economically wasteful, the underlying ability to build an ecosystem of dApps enabling programmable finance is a big improvement over the slow analogue expensive legacy financial system. The rise of the DeFi proto-bank where users own the rights to the NIM earned, will usher in a wave of inclusive banking services for the businesses and individuals crowded out of the capital markets by corporate socialism. That is the dream of the DeFi proto-bank. It will almost certainly not materialise during this bull market. But that narrative will attract, hopefully, hundreds of billions of USD capital into the ecosystem. A sustained pump needs a powerful narrative. I believe this can serve that purpose. I am laser-focused on how 100x can be a cornerstone in the fixed income scaffolding of the crypto capital markets. Watch this space, we are working on some cool shit. A Note on my DeFi Shitcoin Trading I, like many other punters, am enjoying yield farming meme tokens. To put this degenerate behaviour into context: I fully expect to lose most of all of the money I “invest” into any of these projects. In my head I like to believe I can read market sentiment and get out at the top of the bull market. But in reality, like most other traders, I will buy high, hold, hold, hold, and sell well after the top. I view the destruction of my capital as the only way to learn what the next wave of products and services should be built in this space by 100x. You can never find a truffle if you aren’t willing to wallow in the dirt. The size of my positions are tiny. My core investments of gold and silver miners, physical gold, and my interest in 100x dwarf any investment in YAM, YFI, DOT, or any other piece of shit token I decide to buy. There are no nightclubs. I am replacing bubbly water spend, with shitcoins. At least I’m learning something. Global Macro I, like many other pseudo intellectual keyboard warriors, have a massive upside price target for Bitcoin. I will get to that in the next digest. But Q4 is going to be a humdinger. The first title fight of 2020 is Trump vs. Not Trump. The Not Trump camp doesn’t deserve to be mentioned by name as they are so uninspiring and status quo, they do disservice to the so-called progressive party of American politics. I am excited for a few months of dank memes, pithy one-liners, and a gross oversimplification of the ills of the American empire. The financial markets are going to whipsaw as politicians contort themselves to continue feeding at the trough. This unfortunately will have lasting effects on everyone’s lives across the globe. Out of the chaos, more people will mistrust centralised authority and look for ways to protect their physical persons and capital from the wanton destruction waged upon them by their rulers. My pocket rockets are primed and ready. 加油 Gold and Bitcoin. From The BitMEX Research Desk The Crisis Happened: What’s Next? Abstract: Due to numerous requests, we provide a follow up to our February 2019 piece, “Anatomy Of The Next Global Financial Crisis”. We update our thinking following the pandemic driven crash and liquidity driven recovery in financial markets. We no longer think long dated volatility related bets are an effective way to protect portfolios because they are now too expensive. We believe that inflation linked government bonds could be the main pillar going forwards as part of one’s protection strategies, as more of a tactical position. While gold, Bitcoin and to a lesser extent the yen, could be the other main pillars. (Source: Bloomberg; US consumer price index since 1914) Subtleties and Security Abstract: This piece is written by Bitcoin Core maintainer and BitMEX guest writer, Michael Ford. Michael is the first recipient of the expanding 100x Group Bitcoin Developer Grant Program, formerly the HDR Global Trading Bitcoin Developer Grant Program. This follows on from Michael’s first piece for us: Build Systems & Security – Bitcoin Is Improving. In this new piece, Michael explains four security improvements to Bitcoin Core that he has been working on. This work illustrates the importance of testing on multiple platforms. Battle For ASIC Supremacy Abstract: We look at the history of Bitcoin mining ASIC manufacturers, in particular the reported energy efficiency of the mining machines. We analyse the five main players in the market today, with a focus on Canaan and its profit warning right after its IPO. We then evaluate Ebang’s recent IPO prospectus and comment on the challenges the group faces with respect to its market positioning, profitability and geo-politics. We assess MicroBT, who are gaining significant traction in the market, obtaining share from Bitmain, who appear to be facing an almost comically abysmal corporate governance situation. In conclusion we think that post the 2020 Bitcoin halving, further industry consolidation is likely in both the ASIC manufacturing sector and mining farm operating sector. (Source: Manufacturer websites, BitMEX Research; Reported Miner Efficiency (J/TH) vs product launch date) Call to Action: Testing and Improving asmap Abstract: This piece is written by Bitcoin Core contributor and researcher, Gleb Naumenko. Gleb is a recipient of 100x Group’s Bitcoin Developer Grant Program. In this article Gleb writes about how Bitcoin Core connects to other nodes on the network. He first provides some background about the latest default connection policy in Bitcoin Core 0.20.0, before explaining why there may be weaknesses in the current system which could make it easier for malicious actors to initiate an eclipse attack. Gleb goes on to talk about a potential more robust experimental peer selection methodology called “asmap”. Gleb then provides instructions for testing this new feature. Testing would help in ensuring the best security practices become more accessible. (Illustration of Bitcoin Core’s new peer selection methodology) Bitcoin Softfork Activation Methodology Abstract: Bitcoin’s Taproot softfork upgrade looks almost ready and the Bitcoin community has started to seriously discuss the potential activation methodologies. In this piece, we summarise the main choices when it comes to the activation and discuss the most significant points of contention. We conclude by postulating that there is no perfect activating methodology. Any activation approach could set a bad precedent, which could be exploited at some future date. However, although there is a lot of “bikeshedding” occurring, due to the lack of contention about this particular upgrade, the exact activating path taken at this point may not be particularly critical. A potential partial solution to some of the dilemmas present and possible way forward could be for Bitcoin Core to release a client with a relatively passive activation logic and for other community members to follow on from this by releasing clients that force the same activation in a slightly more assertive manner. Antminer S19 Pro vs Whatsminer M30S+ Abstract: We compare and measure various performance metrics for two of the latest and most energy efficient Bitcoin mining products, MicroBT’s Whatsminer M30S+ and Bitmain’s Antminer S19 Pro. Obviously the more expensive 7nm Bitmain product is more powerful, however the miners are pretty similar in terms of output. Our data over a short three day period shows that the Bitmain miner has slightly stronger performance than the Whatsminer, however the Whatsminer appears to have superior stability. In general, both machines are impressive and we predict the two companies will be in neck and neck competition over the next few years. Antminer S19 Pro vs Whatsminer M30S+ (Part 2) – Thermal Image Analysis Abstract: We provide a follow up to our previous piece, a comparison between the Antminer S19 Pro and the Whatsminer M30S+. We focus on the thermal characteristics of the miners and provide thermal images. The thermal images indicate more clearly that the Whatsminer has a higher operating temperature than the Antminer (perhaps by design), while both devices have a similar impact heating the external environment. (Thermal image of the Whatsminer M30S+) Risk Disclaimer No articles in this email should be copied or reproduced in whole or in part. The information contained does not constitute research or a recommendation. Neither HDR Global Trading Limited nor any of its affiliates make any representation or warranty as to the accuracy or completeness of the statements or any information contained in these articles and any liability therefor (including in respect of direct, indirect or consequential loss or damage) is expressly disclaimed. This is not providing any financial, economic, legal, accounting or tax advice or recommendations. In addition, the receipt of this email is not to be taken as constituting the giving of investment advice nor to constitute such person a client of the BitMEX trading platform. Contact Us | Subscribe | Unsubscribe
  20. 0.20.1 Release Notes Bitcoin Core version 0.20.1 is now available from: https://bitcoincore.org/bin/bitcoin-core-0.20.1/ This minor release includes various bug fixes and performance improvements, as well as updated translations. Please report bugs using the issue tracker at GitHub: https://github.com/bitcoin/bitcoin/issues To receive security and update notifications, please subscribe to: https://bitcoincore.org/en/list/announcements/join/ How to Upgrade If you are running an older version, shut it down. Wait until it has completely shut down (which might take a few minutes in some cases), then run the installer (on Windows) or just copy over /Applications/Bitcoin-Qt (on Mac) or bitcoind/bitcoin-qt (on Linux). Upgrading directly from a version of Bitcoin Core that has reached its EOL is possible, but it might take some time if the data directory needs to be migrated. Old wallet versions of Bitcoin Core are generally supported. Compatibility Bitcoin Core is supported and extensively tested on operating systems using the Linux kernel, macOS 10.12+, and Windows 7 and newer. Bitcoin Core should also work on most other Unix-like systems but is not as frequently tested on them. It is not recommended to use Bitcoin Core on unsupported systems. From Bitcoin Core 0.20.0 onwards, macOS versions earlier than 10.12 are no longer supported. Additionally, Bitcoin Core does not yet change appearance when macOS “dark mode” is activated. Known Bugs The process for generating the source code release (“tarball”) has changed in an effort to make it more complete, however, there are a few regressions in this release: The generated configure script is currently missing, and you will need to install autotools and run ./autogen.sh before you can run ./configure. This is the same as when checking out from git. Instead of running make simply, you should instead run BITCOIN_GENBUILD_NO_GIT=1 make. Notable changes Changes regarding misbehaving peers Peers that misbehave (e.g. send us invalid blocks) are now referred to as discouraged nodes in log output, as they’re not (and weren’t) strictly banned: incoming connections are still allowed from them, but they’re preferred for eviction. Furthermore, a few additional changes are introduced to how discouraged addresses are treated: Discouraging an address does not time out automatically after 24 hours (or the -bantime setting). Depending on traffic from other peers, discouragement may time out at an indeterminate time. Discouragement is not persisted over restarts. There is no method to list discouraged addresses. They are not returned by the listbanned RPC. That RPC also no longer reports the ban_reason field, as "manually added" is the only remaining option. Discouragement cannot be removed with the setban remove RPC command. If you need to remove a discouragement, you can remove all discouragements by stop-starting your node. Notification changes -walletnotify notifications are now sent for wallet transactions that are removed from the mempool because they conflict with a new block. These notifications were sent previously before the v0.19 release, but had been broken since that release (bug #18325) PSBT changes PSBTs will contain both the non-witness utxo and the witness utxo for segwit inputs in order to restore compatibility with wallet software that are now requiring the full previous transaction for segwit inputs. The witness utxo is still provided to maintain compatibility with software which relied on its existence to determine whether an input was segwit. 0.20.1 change log Mining #19019 Fix GBT: Restore “!segwit” and “csv” to “rules” key (luke-jr) P2P protocol and network code #19219 Replace automatic bans with discouragement filter (sipa) Wallet #19300 Handle concurrent wallet loading (promag) #18982 Minimal fix to restore conflicted transaction notifications (ryanofsky) RPC and other APIs #19524 Increment input value sum only once per UTXO in decodepsbt (fanquake) #19517 psbt: Increment input value sum only once per UTXO in decodepsbt (achow101) #19215 psbt: Include and allow both non_witness_utxo and witness_utxo for segwit inputs (achow101) GUI #19097 Add missing QPainterPath include (achow101) #19059 update Qt base translations for macOS release (fanquake) Build system #19152 improve build OS configure output (skmcontrib) #19536 qt, build: Fix QFileDialog for static builds (hebasto) Tests and QA #19444 Remove cached directories and associated script blocks from appveyor config (sipsorcery) #18640 appveyor: Remove clcache (MarcoFalke) Miscellaneous #19194 util: Don’t reference errno when pthread fails (miztake) #18700 Fix locking on WSL using flock instead of fcntl (meshcollider) Credits Thanks to everyone who directly contributed to this release: Aaron Clauson Andrew Chow fanquake Hennadii Stepanov João Barbosa Luke Dashjr MarcoFalke MIZUTA Takeshi Pieter Wuille Russell Yanofsky sachinkm77 Samuel Dobson Wladimir J. van der Laan As well as to everyone that helped with translations on Transifex. 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  21. 0.20.0 Release Notes Bitcoin Core version 0.20.0 is now available from: https://bitcoincore.org/bin/bitcoin-core-0.20.0/ This release includes new features, various bug fixes and performance improvements, as well as updated translations. Please report bugs using the issue tracker at GitHub: https://github.com/bitcoin/bitcoin/issues To receive security and update notifications, please subscribe to: https://bitcoincore.org/en/list/announcements/join/ How to Upgrade If you are running an older version, shut it down. Wait until it has completely shut down (which might take a few minutes in some cases), then run the installer (on Windows) or just copy over /Applications/Bitcoin-Qt (on Mac) or bitcoind/bitcoin-qt (on Linux). Upgrading directly from a version of Bitcoin Core that has reached its EOL is possible, but it might take some time if the data directory needs to be migrated. Old wallet versions of Bitcoin Core are generally supported. Compatibility Bitcoin Core is supported and extensively tested on operating systems using the Linux kernel, macOS 10.12+, and Windows 7 and newer. Bitcoin Core should also work on most other Unix-like systems but is not as frequently tested on them. It is not recommended to use Bitcoin Core on unsupported systems. From Bitcoin Core 0.20.0 onwards, macOS versions earlier than 10.12 are no longer supported. Additionally, Bitcoin Core does not yet change appearance when macOS “dark mode” is activated. Known Bugs The process for generating the source code release (“tarball”) has changed in an effort to make it more complete, however, there are a few regressions in this release: The generated configure script is currently missing, and you will need to install autotools and run ./autogen.sh before you can run ./configure. This is the same as when checking out from git. Instead of running make simply, you should instead run BITCOIN_GENBUILD_NO_GIT=1 make. Notable changes P2P and network changes Removal of BIP61 reject network messages from Bitcoin Core The -enablebip61 command line option to enable BIP61 has been removed. (#17004) This feature has been disabled by default since Bitcoin Core version 0.18.0. Nodes on the network can not generally be trusted to send valid messages (including reject messages), so this should only ever be used when connected to a trusted node. Please use the alternatives recommended below if you rely on this removed feature: Testing or debugging of implementations of the Bitcoin P2P network protocol should be done by inspecting the log messages that are produced by a recent version of Bitcoin Core. Bitcoin Core logs debug messages (-debug=<category>) to a stream (-printtoconsole) or to a file (-debuglogfile=<debug.log>). Testing the validity of a block can be achieved by specific RPCs: submitblock getblocktemplate with 'mode' set to 'proposal' for blocks with potentially invalid POW Testing the validity of a transaction can be achieved by specific RPCs: sendrawtransaction testmempoolaccept Wallets should not assume a transaction has propagated to the network just because there are no reject messages. Instead, listen for the transaction to be announced by other peers on the network. Wallets should not assume a lack of reject messages means a transaction pays an appropriate fee. Instead, set fees using fee estimation and use replace-by-fee to increase a transaction’s fee if it hasn’t confirmed within the desired amount of time. The removal of BIP61 reject message support also has the following minor RPC and logging implications: testmempoolaccept and sendrawtransaction no longer return the P2P reject code when a transaction is not accepted to the mempool. They still return the verbal reject reason. Log messages that previously reported the reject code when a transaction was not accepted to the mempool now no longer report the reject code. The reason for rejection is still reported. Updated RPCs The RPCs which accept descriptors now accept the new sortedmulti(...) descriptor type which supports multisig scripts where the public keys are sorted lexicographically in the resulting script. (#17056) The walletprocesspsbt and walletcreatefundedpsbt RPCs now include BIP32 derivation paths by default for public keys if we know them. This can be disabled by setting the bip32derivs parameter to false. (#17264) The bumpfee RPC’s parameter totalFee, which was deprecated in 0.19, has been removed. (#18312) The bumpfee RPC will return a PSBT when used with wallets that have private keys disabled. (#16373) The getpeerinfo RPC now includes a mapped_as field to indicate the mapped Autonomous System used for diversifying peer selection. See the -asmap configuration option described below in New Settings. (#16702) The createmultisig and addmultisigaddress RPCs now return an output script descriptor for the newly created address. (#18032) Build System OpenSSL is no longer used by Bitcoin Core. (#17265) BIP70 support has been fully removed from Bitcoin Core. The --enable-bip70 option remains, but it will throw an error during configure. (#17165) glibc 2.17 or greater is now required to run the release binaries. This retains compatibility with RHEL 7, CentOS 7, Debian 8 and Ubuntu 14.04 LTS. (#17538) The source code archives that are provided with gitian builds no longer contain any autotools artifacts. Therefore, to build from such source, a user should run the ./autogen.sh script from the root of the unpacked archive. This implies that autotools and other required packages are installed on the user’s system. (#18331) New settings New rpcwhitelist and rpcwhitelistdefault configuration parameters allow giving certain RPC users permissions to only some RPC calls. (#12763) A new -asmap configuration option has been added to diversify the node’s network connections by mapping IP addresses Autonomous System Numbers (ASNs) and then limiting the number of connections made to any single ASN. See issue #16599, PR #16702, and the bitcoind help for more information. This option is experimental and subject to removal or breaking changes in future releases, so the legacy /16 prefix mapping of IP addresses remains the default. (#16702) Updated settings All custom settings configured when Bitcoin Core starts are now written to the debug.log file to assist troubleshooting. (#16115) Importing blocks upon startup via the bootstrap.dat file no longer occurs by default. The file must now be specified with -loadblock=<file>. (#17044) The -debug=db logging category has been renamed to -debug=walletdb to distinguish it from coindb. The -debug=db option has been deprecated and will be removed in the next major release. (#17410) The -walletnotify configuration parameter will now replace any %w in its argument with the name of the wallet generating the notification. This is not supported on Windows. (#13339) Removed settings The -whitelistforcerelay configuration parameter has been removed after it was discovered that it was rendered ineffective in version 0.13 and hasn’t actually been supported for almost four years. (#17985) GUI changes The “Start Bitcoin Core on system login” option has been removed on macOS. (#17567) In the Peers window, the details for a peer now displays a Mapped AS field to indicate the mapped Autonomous System used for diversifying peer selection. See the -asmap configuration option in New Settings, above. (#18402) A “known bug” announced in the release notes of version 0.18 has been fixed. The issue affected anyone who simultaneously used multiple Bitcoin Core wallets and the GUI coin control feature. (#18894) For watch-only wallets, creating a new transaction in the Send screen or fee bumping an existing transaction in the Transactions screen will automatically copy a Partially-Signed Bitcoin Transaction (PSBT) to the system clipboard. This can then be pasted into an external program such as HWI for signing. Future versions of Bitcoin Core should support a GUI option for finalizing and broadcasting PSBTs, but for now the debug console may be used with the finalizepsbt and sendrawtransaction RPCs. (#16944, #17492) Wallet The wallet now by default uses bech32 addresses when using RPC, and creates native segwit change outputs. (#16884) The way that output trust was computed has been fixed, which affects confirmed/unconfirmed balance status and coin selection. (#16766) The gettransaction, listtransactions and listsinceblock RPC responses now also include the height of the block that contains the wallet transaction, if any. (#17437) The getaddressinfo RPC has had its label field deprecated (re-enable for this release using the configuration parameter -deprecatedrpc=label). The labels field is altered from returning JSON objects to returning a JSON array of label names (re-enable previous behavior for this release using the configuration parameter -deprecatedrpc=labelspurpose). Backwards compatibility using the deprecated configuration parameters is expected to be dropped in the 0.21 release. (#17585, #17578) Documentation changes Bitcoin Core’s automatically-generated source code documentation is now available at https://doxygen.bitcoincore.org. (#17596) Low-level changes Utilities The bitcoin-cli utility used with the -getinfo parameter now returns a headers field with the number of downloaded block headers on the best headers chain (similar to the blocks field that is also returned) and a verificationprogress field that estimates how much of the best block chain has been synced by the local node. The information returned no longer includes the protocolversion, walletversion, and keypoololdest fields. (#17302, #17650) The bitcoin-cli utility now accepts a -stdinwalletpassphrase parameter that can be used when calling the walletpassphrase and walletpassphrasechange RPCs to read the passphrase from standard input without echoing it to the terminal, improving security against anyone who can look at your screen. The existing -stdinrpcpass parameter is also updated to not echo the passphrase. (#13716) Command line Command line options prefixed with main/test/regtest network names like -main.port=8333 -test.server=1 previously were allowed but ignored. Now they trigger “Invalid parameter” errors on startup. (#17482) New RPCs The dumptxoutset RPC outputs a serialized snapshot of the current UTXO set. A script is provided in the contrib/devtools directory for generating a snapshot of the UTXO set at a particular block height. (#16899) The generatetodescriptor RPC allows testers using regtest mode to generate blocks that pay an arbitrary output script descriptor. (#16943) Updated RPCs The verifychain RPC default values are now static instead of depending on the command line options or configuration file (-checklevel, and -checkblocks). Users can pass in the RPC arguments explicitly when they don’t want to rely on the default values. (#18541) The getblockchaininfo RPC’s verificationprogress field will no longer report values higher than 1. Previously it would occasionally report the chain was more than 100% verified. (#17328) Tests It is now an error to use an unqualified walletdir=path setting in the config file if running on testnet or regtest networks. The setting now needs to be qualified as chain.walletdir=path or placed in the appropriate [chain] section. (#17447) -fallbackfee was 0 (disabled) by default for the main chain, but 0.0002 by default for the test chains. Now it is 0 by default for all chains. Testnet and regtest users will have to add fallbackfee=0.0002 to their configuration if they weren’t setting it and they want it to keep working like before. (#16524) Build system Support is provided for building with the Android Native Development Kit (NDK). (#16110) 0.20.0 change log Mining #18742 miner: Avoid stack-use-after-return in validationinterface (MarcoFalke) Block and transaction handling #15283 log: Fix UB with bench on genesis block (instagibbs) #16507 feefilter: Compute the absolute fee rather than stored rate (instagibbs) #16688 log: Add validation interface logging (jkczyz) #16805 log: Add timing information to FlushStateToDisk() (jamesob) #16902 O(1) OP_IF/NOTIF/ELSE/ENDIF script implementation (sipa) #16945 introduce CChainState::GetCoinsCacheSizeState (jamesob) #16974 Walk pindexBestHeader back to ChainActive().Tip() if it is invalid (TheBlueMatt) #17004 Remove REJECT code from CValidationState (jnewbery) #17080 Explain why fCheckDuplicateInputs can not be skipped and remove it (MarcoFalke) #17328 GuessVerificationProgress: cap the ratio to 1 (darosior) #17399 Templatize ValidationState instead of subclassing (jkczyz) #17407 node: Add reference to mempool in NodeContext (MarcoFalke) #17708 prevector: Avoid misaligned member accesses (ajtowns) #17850,#17896,#17957,#18021,#18021,#18112 Serialization improvements (sipa) #17925 Improve UpdateTransactionsFromBlock with Epochs (JeremyRubin) #18002 Abstract out script execution out of VerifyWitnessProgram() (sipa) #18388 Make VerifyWitnessProgram use a Span stack (sipa) #18433 serialization: prevent int overflow for big Coin::nHeight (pierreN) #18500 chainparams: Bump assumed valid hash (MarcoFalke) #18551 Do not clear validationinterface entries being executed (sipa) P2P protocol and network code #15437 Remove BIP61 reject messages (MarcoFalke) #16702 Supply and use asmap to improve IP bucketing in addrman (naumenkogs) #16851 Continue relaying transactions after they expire from mapRelay (ajtowns) #17164 Avoid allocating memory for addrKnown where we don’t need it (naumenkogs) #17243 tools: add PoissonNextSend method that returns mockable time (amitiuttarwar) #17251 SocketHandler logs peer id for close and disconnect (Sjors) #17573 Seed RNG with precision timestamps on receipt of net messages (TheBlueMatt) #17624 Fix an uninitialized read in ProcessMessage(…, “tx”, …) when receiving a transaction we already have (practicalswift) #17754 Don’t allow resolving of std::string with embedded NUL characters. Add tests (practicalswift) #17758 Fix CNetAddr::IsRFC2544 comment + tests (tynes) #17812 config, net, test: Asmap feature refinements and functional tests (jonatack) #17951 Use rolling bloom filter of recent block txs for AlreadyHave() check (sdaftuar) #17985 Remove forcerelay of rejected txs (MarcoFalke) #18023 Fix some asmap issues (sipa) #18054 Reference instead of copy in BlockConnected range loop (jonatack) #18376 Fix use-after-free in tests (vasild) #18454 Make addr relay mockable, add test (MarcoFalke) #18458 Add missing cs_vNodes lock (MarcoFalke) #18506 Hardcoded seeds update for 0.20 (laanwj) #18808 Drop unknown types in getdata (jnewbery) #18962 Only send a getheaders for one block in an INV (jnewbery) Wallet #13339 Replace %w by wallet name in -walletnotify script (promag) #15931 Remove GetDepthInMainChain dependency on locked chain interface (ariard) #16373 bumpfee: Return PSBT when wallet has privkeys disabled (instagibbs) #16524 Disable -fallbackfee by default (jtimon) #16766 Make IsTrusted scan parents recursively (JeremyRubin) #16884 Change default address type to bech32 (instagibbs) #16911 Only check the hash of transactions loaded from disk (achow101) #16923 Handle duplicate fileid exception (promag) #17056 descriptors: Introduce sortedmulti descriptor (achow101) #17070 Avoid showing GUI popups on RPC errors (MarcoFalke) #17138 Remove wallet access to some node arguments (jnewbery) #17237 LearnRelatedScripts only if KeepDestination (promag) #17260 Split some CWallet functions into new LegacyScriptPubKeyMan (achow101) #17261 Make ScriptPubKeyMan an actual interface and the wallet to have multiple (achow101) #17290 Enable BnB coin selection for preset inputs and subtract fee from outputs (achow101) #17373 Various fixes and cleanup to keypool handling in LegacyScriptPubKeyMan and CWallet (achow101) #17410 Rename db log category to walletdb (like coindb) (laanwj) #17444 Avoid showing GUI popups on RPC errors (take 2) (MarcoFalke) #17447 Make -walletdir network only (promag) #17537 Cleanup and move opportunistic and superfluous TopUp()s (achow101) #17553 Remove out of date comments for CalculateMaximumSignedTxSize (instagibbs) #17568 Fix when sufficient preset inputs and subtractFeeFromOutputs (achow101) #17677 Activate watchonly wallet behavior for LegacySPKM only (instagibbs) #17719 Document better -keypool as a look-ahead safety mechanism (ariard) #17843 Reset reused transactions cache (fjahr) #17889 Improve CWallet:MarkDestinationsDirty (promag) #18034 Get the OutputType for a descriptor (achow101) #18067 Improve LegacyScriptPubKeyMan::CanProvide script recognition (ryanofsky) #18115 Pass in transactions and messages for signing instead of exporting the private keys (achow101) #18192,#18546 Bugfix: Wallet: Safely deal with change in the address book (luke-jr) #18204 descriptors: Improve descriptor cache and cache xpubs (achow101) #18274 rpc/wallet: Initialize nFeeRequired to avoid using garbage value on failure (kallewoof) #18312 Remove deprecated fee bumping by totalFee (jonatack) #18338 Fix wallet unload race condition (promag) RPC and other APIs #12763 Add RPC Whitelist Feature from #12248 (JeremyRubin) #13716 cli: -stdinwalletpassphrase and non-echo stdin passwords (kallewoof) #16689 Add missing fields to wallet rpc help output (ariard) #16821 Fix bug where duplicate PSBT keys are accepted (erasmospunk) #16899 UTXO snapshot creation (dumptxoutset) #17156 psbt: Check that various indexes and amounts are within bounds (achow101) #17264 Set default bip32derivs to true for psbt methods (Sjors) #17283 improve getaddressinfo test coverage, help, code docs (jonatack) #17302 cli: Add “headers” and “verificationprogress” to -getinfo (laanwj) #17318 replace asserts in RPC code with CHECK_NONFATAL and add linter (adamjonas) #17437 Expose block height of wallet transactions (promag) #17519 Remove unused COINBASE_FLAGS (narula) #17578 Simplify getaddressinfo labels, deprecate previous behavior (jonatack) #17585 deprecate getaddressinfo label (jonatack) #17746 Remove vector copy from listtransactions (promag) #17809 Auto-format RPCResult (MarcoFalke) #18032 Output a descriptor in createmultisig and addmultisigaddress (achow101) #18122 Update validateaddress RPCExamples to bech32 (theStack) #18208 Change RPCExamples to bech32 (yusufsahinhamza) #18268 Remove redundant types from descriptions (docallag) #18346 Document an RPCResult for all calls; Enforce at compile time (MarcoFalke) #18396 Add missing HelpExampleRpc for getblockfilter (theStack) #18398 Fix broken RPCExamples for waitforblock(height) (theStack) #18444 Remove final comma for last entry of fixed-size arrays/objects in RPCResult (luke-jr) #18459 Remove unused getbalances() code (jonatack) #18484 Correctly compute redeemScript from witnessScript for signrawtransaction (achow101) #18487 Fix rpcRunLater race in walletpassphrase (promag) #18499 Make rpc documentation not depend on call-time rpc args (MarcoFalke) #18532 Avoid initialization-order-fiasco on static CRPCCommand tables (MarcoFalke) #18541 Make verifychain default values static, not depend on global args (MarcoFalke) #18809 Do not advertise dumptxoutset as a way to flush the chainstate (MarcoFalke) #18814 Relock wallet only if most recent callback (promag) GUI #15023 Restore RPC Console to non-wallet tray icon menu (luke-jr) #15084 Don’t disable the sync overlay when wallet is disabled (benthecarman) #15098 Show addresses for “SendToSelf” transactions (hebasto) #15756 Add shortcuts for tab tools (promag) #16944 create PSBT with watch-only wallet (Sjors) #16964 Change sendcoins dialogue Yes to Send (instagibbs) #17068 Always generate bitcoinstrings.cpp on make translate (D4nte) #17096 Rename debug window (Zero-1729) #17105 Make RPCConsole::TabTypes an enum class (promag) #17125 Add toolTip and placeholderText to sign message fields (dannmat) #17165 Remove BIP70 support (fanquake) #17180 Improved tooltip for send amount field (JeremyCrookshank) #17186 Add placeholder text to the sign message field (Danny-Scott) #17195 Send amount placeholder value (JeremyCrookshank) #17226 Fix payAmount tooltip in SendCoinsEntry (promag) #17360 Cleaning up hide button tool tip (Danny-Scott) #17446 Changed tooltip for ‘Label’ & ‘Message’ text fields to be more clear (dannmat) #17453 Fix intro dialog labels when the prune button is toggled (hebasto) #17474 Bugfix: GUI: Recognise NETWORK_LIMITED in formatServicesStr (luke-jr) #17492 Bump fee returns PSBT on clipboard for watchonly-only wallets (instagibbs) #17567 Remove macOS start on login code (fanquake) #17587 Show watch-only balance in send screen (Sjors) #17694 Disable 3rd-party tx-urls when wallet disabled (brakmic) #17696 Force set nPruneSize in QSettings after the intro dialog (hebasto) #17702 Move static placeholder texts to forms (laanwj) #17826 Log Qt related info (hebasto) #17886 Restore English translation option (achow101) #17906 Set CConnman byte counters earlier to avoid uninitialized reads (ryanofsky) #17935 Hide HD & encryption icons when no wallet loaded (brakmic) #17998 Shortcut to close ModalOverlay (emilengler) #18007 Bugfix: GUI: Hide the HD/encrypt icons earlier so they get re-shown if another wallet is open (luke-jr) #18060 Drop PeerTableModel dependency to ClientModel (promag) #18062 Fix unintialized WalletView::progressDialog (promag) #18091 Pass clientmodel changes from walletframe to walletviews (jonasschnelli) #18101 Fix deprecated QCharRef usage (hebasto) #18121 Throttle GUI update pace when -reindex (hebasto) #18123 Fix race in WalletModel::pollBalanceChanged (ryanofsky) #18160 Avoid Wallet::GetBalance in WalletModel::pollBalanceChanged (promag) #18360 Bump transifex slug and update English translations for 0.20 (laanwj) #18402 Display mapped AS in peers info window (jonatack) #18492 Translations update pre-branch (laanwj) #18549 Fix Window -> Minimize menu item (hebasto) #18578 Fix leak in CoinControlDialog::updateView (promag) #18894 Fix manual coin control with multiple wallets loaded (promag) Build system #16667 Remove mingw linker workaround from win gitian descriptor (fanquake) #16669 Use new fork of osslsigncode for windows gitian signing (fanquake) #16949 Only pass –disable-dependency-tracking to packages that understand it (fanquake) #17008 Bump libevent to 2.1.11 in depends (stefanwouldgo) #17029 gitian: Various improvements for windows descriptor (dongcarl) #17033 Disable _FORTIFY_SOURCE when enable-debug (achow101) #17057 Switch to upstream libdmg-hfsplus (fanquake) #17066 Remove workaround for ancient libtool (hebasto) #17074 Added double quotes (mztriz) #17087 Add variable printing target to Makefiles (dongcarl) #17118 depends macOS: point –sysroot to SDK (Sjors) #17231 Fix boost mac cross build with clang 9+ (theuni) #17265 Remove OpenSSL (fanquake) #17284 Update retry to current version (RandyMcMillan) #17308 nsis: Write to correct filename in first place (dongcarl) #17324,#18099 Update univalue subtree (MarcoFalke) #17398 Update leveldb to 1.22+ (laanwj) #17409 Avoid hardcoded libfaketime dir in gitian (MarcoFalke) #17466 Fix C{,XX} pickup (dongcarl) #17483 Set gitian arch back to amd64 (MarcoFalke) #17486 Make Travis catch unused variables (Sjors) #17538 Bump minimum libc to 2.17 for release binaries (fanquake) #17542 Create test utility library from src/test/util/ (brakmic) #17545 Remove libanl.so.1 from ALLOWED_LIBRARIES (fanquake) #17547 Fix configure report about qr (hebasto) #17569 Allow export of environ symbols and work around rv64 toolchain issue (laanwj) #17647 lcov: filter depends from coverage reports (nijynot) #17658 Add ability to skip building qrencode (fanquake) #17678 Support for S390X and POWER targets (MarcoFalke) #17682 util: Update tinyformat to upstream (laanwj) #17698 Don’t configure xcb_proto (fanquake) #17730 Remove Qt networking features (fanquake) #17738 Remove linking librt for backwards compatibility (fanquake) #17740 Remove configure checks for win libraries we don’t link against (fanquake) #17741 Included test_bitcoin-qt in msvc build (sipsorcery) #17756 Remove WINDOWS_BITS from build system (fanquake) #17769 Set AC_PREREQ to 2.69 (fanquake) #17880 Add -Wdate-time to Werror flags (fanquake) #17910 Remove double LIBBITCOIN_SERVER linking (fanquake) #17928 Consistent use of package variable (Bushstar) #17933 guix: Pin Guix using guix time-machine (dongcarl) #17948 pass -fno-ident in Windows gitian descriptor (fanquake) #18003 Remove –large-address-aware linker flag (fanquake) #18004 Don’t embed a build-id when building libdmg-hfsplus (fanquake) #18051 Fix behavior when ALLOW_HOST_PACKAGES unset (hebasto) #18059 Add missing attributes to Win installer (fanquake) #18104 Skip i686 build by default in guix and gitian (MarcoFalke) #18107 Add cov_fuzz target (MarcoFalke) #18135 Add –enable-determinism configure flag (fanquake) #18145 Add Wreturn-type to Werror flags, check on more Travis machines (Sjors) #18264 Remove Boost Chrono (fanquake) #18290 Set minimum Automake version to 1.13 (hebasto) #18320 guix: Remove now-unnecessary gcc make flag (dongcarl) #18331 Use git archive as source tarball (hebasto) #18397 Fix libevent linking for bench_bitcoin binary (hebasto) #18426 scripts: Previous_release: improve behaviour on failed download (theStack) #18429 Remove double LIBBITCOIN_SERVER from bench-Makefile (brakmic) #18528 Create test_fuzz library from src/test/fuzz/fuzz.cpp (brakmic) #18558 Fix boost detection for arch armv7l (hebasto) #18598 gitian: Add missing automake package to gitian-win-signer.yml (achow101) #18676 Check libevent minimum version in configure script (hebasto) #18945 Ensure source tarball has leading directory name (laanwj) Platform support #16110 Add Android NDK support (icota) #16392 macOS toolchain update (fanquake) #16569 Increase init file stop timeout (setpill) #17151 Remove OpenSSL PRNG seeding (Windows, Qt only) (fanquake) #17365 Update README.md with working Android targets and API levels (icota) #17521 Only use D-Bus with Qt on linux (fanquake) #17550 Set minimum supported macOS to 10.12 (fanquake) #17592 Appveyor install libevent[thread] vcpkg (sipsorcery) #17660 Remove deprecated key from macOS Info.plist (fanquake) #17663 Pass -dead_strip_dylibs to ld on macOS (fanquake) #17676 Don’t use OpenGL in Qt on macOS (fanquake) #17686 Add -bind_at_load to macOS hardened LDFLAGS (fanquake) #17787 scripts: Add macho pie check to security-check.py (fanquake) #17800 random: don’t special case clock usage on macOS (fanquake) #17863 scripts: Add macho dylib checks to symbol-check.py (fanquake) #17899 msvc: Ignore msvc linker warning and update to msvc build instructions (sipsorcery) #17916 windows: Enable heap terminate-on-corruption (fanquake) #18082 logging: Enable thread_local usage on macos (fanquake) #18108 Fix .gitignore policy in build_msvc directory (hebasto) #18295 scripts: Add macho lazy bindings check to security-check.py (fanquake) #18358 util: Fix compilation with mingw-w64 7.0.0 (fanquake) #18359 Fix sysctl() detection on macOS (fanquake) #18364 random: remove getentropy() fallback for macOS < 10.12 (fanquake) #18395 scripts: Add pe dylib checking to symbol-check.py (fanquake) #18415 scripts: Add macho tests to test-security-check.py (fanquake) #18425 releases: Update with new Windows code signing certificate (achow101) #18702 Fix ASLR for bitcoin-cli on Windows (fanquake) Tests and QA #12134 Build previous releases and run functional tests (Sjors) #13693 Add coverage to estimaterawfee and estimatesmartfee (Empact) #13728 lint: Run the ci lint stage on mac (Empact) #15443 Add getdescriptorinfo functional test (promag) #15888 Add wallet_implicitsegwit to test the ability to transform keys between address types (luke-jr) #16540 Add ASSERT_DEBUG_LOG to unit test framework (MarcoFalke) #16597 travis: Run full test suite on native macos (Sjors) #16681 Use self.chain instead of ‘regtest’ in all current tests (jtimon) #16786 add unit test for wallet watch-only methods involving PubKeys (theStack) #16943 Add generatetodescriptor RPC (MarcoFalke) #16973 Fix combine_logs.py for AppVeyor build (mzumsande) #16975 Show debug log on unit test failure (MarcoFalke) #16978 Seed test RNG context for each test case, print seed (MarcoFalke) #17009, #17018, #17050, #17051, #17071, #17076, #17083, #17093, #17109, #17113, #17136, #17229, #17291, #17357, #17771, #17777, #17917, #17926, #17972, #17989, #17996, #18009, #18029, #18047, #18126, #18176, #18206, #18353, #18363, #18407, #18417, #18423, #18445, #18455, #18565 Add fuzzing harnesses (practicalswift) #17011 ci: Use busybox utils for one build (MarcoFalke) #17030 Fix Python Docstring to include all Args (jbampton) #17041 ci: Run tests on arm (MarcoFalke) #17069 Pass fuzzing inputs as constant references (practicalswift) #17091 Add test for loadblock option and linearize scripts (fjahr) #17108 fix “tx-size-small” errors after default address change (theStack) #17121 Speed up wallet_backup by whitelisting peers (immediate tx relay) (theStack) #17124 Speed up wallet_address_types by whitelisting peers (immediate tx relay) (theStack) #17140 Fix bug in blockfilter_index_tests (jimpo) #17199 use default address type (bech32) for wallet_bumpfee tests (theStack) #17205 ci: Enable address sanitizer (asan) stack-use-after-return checking (practicalswift) #17206 Add testcase to simulate bitcoin schema in leveldb (adamjonas) #17209 Remove no longer needed UBSan suppressions (issues fixed). Add documentation (practicalswift) #17220 Add unit testing for the CompressScript function (adamjonas) #17225 Test serialisation as part of deserialisation fuzzing. Test round-trip equality where possible (practicalswift) #17228 Add RegTestingSetup to setup_common (MarcoFalke) #17233 travis: Run unit and functional tests on native arm (MarcoFalke) #17235 Skip unnecessary fuzzer initialisation. Hold ECCVerifyHandle only when needed (practicalswift) #17240 ci: Disable functional tests on mac host (MarcoFalke) #17254 Fix script_p2sh_tests OP_PUSHBACK2/4 missing (adamjonas) #17267 bench: Fix negative values and zero for -evals flag (nijynot) #17275 pubkey: Assert CPubKey’s ECCVerifyHandle precondition (practicalswift) #17288 Added TestWrapper class for interactive Python environments (jachiang) #17292 Add new mempool benchmarks for a complex pool (JeremyRubin) #17299 add reason checks for non-standard txs in test_IsStandard (theStack) #17322 Fix input size assertion in wallet_bumpfee.py (instagibbs) #17327 Add rpc_fundrawtransaction logging (jonatack) #17330 Add shrinkdebugfile=0 to regtest bitcoin.conf (sdaftuar) #17340 Speed up fundrawtransaction test (jnewbery) #17345 Do not instantiate CAddrDB for static call CAddrDB::Read() (hebasto) #17362 Speed up wallet_avoidreuse, add logging (jonatack) #17363 add “diamond” unit test to MempoolAncestryTests (theStack) #17366 Reset global args between test suites (MarcoFalke) #17367 ci: Run non-cross-compile builds natively (MarcoFalke) #17378 TestShell: Fix typos & implement cleanups (jachiang) #17384 Create new test library (MarcoFalke) #17387 wallet_importmulti: use addresses of the same type as being imported (achow101) #17388 Add missing newline in util_ChainMerge test (ryanofsky) #17390 Add util_ArgParsing test (ryanofsky) #17420 travis: Rework cache_err_msg (MarcoFalke) #17423 ci: Make ci system read-only on the git work tree (MarcoFalke) #17435 check custom ancestor limit in mempool_packages.py (theStack) #17455 Update valgrind suppressions (practicalswift) #17461 Check custom descendant limit in mempool_packages.py (theStack) #17469 Remove fragile assert_memory_usage_stable (MarcoFalke) #17470 ci: Use clang-8 for fuzzing to run on aarch64 ci systems (MarcoFalke) #17480 Add unit test for non-standard txs with too large scriptSig (theStack) #17497 Skip tests when utils haven’t been compiled (fanquake) #17502 Add unit test for non-standard bare multisig txs (theStack) #17511 Add bounds checks before base58 decoding (sipa) #17517 ci: Bump to clang-8 for asan build to avoid segfaults on ppc64le (MarcoFalke) #17522 Wait until mempool is loaded in wallet_abandonconflict (MarcoFalke) #17532 Add functional test for non-standard txs with too large scriptSig (theStack) #17541 Add functional test for non-standard bare multisig txs (theStack) #17555 Add unit test for non-standard txs with wrong nVersion (dspicher) #17571 Add libtest_util library to msvc build configuration (sipsorcery) #17591 ci: Add big endian platform - s390x (elichai) #17593 Move more utility functions into test utility library (mzumsande) #17633 Add option –valgrind to run the functional tests under Valgrind (practicalswift) #17635 ci: Add centos 7 build (hebasto) #17641 Add unit test for leveldb creation with unicode path (sipsorcery) #17674 Add initialization order fiasco detection in Travis (practicalswift) #17675 Enable tests which are incorrectly skipped when running test_runner.py --usecli (practicalswift) #17685 Fix bug in the descriptor parsing fuzzing harness (descriptor_parse) (practicalswift) #17705 re-enable CLI test support by using EncodeDecimal in json.dumps() (fanquake) #17720 add unit test for non-standard “scriptsig-not-pushonly” txs (theStack) #17767 ci: Fix qemu issues (MarcoFalke) #17793 ci: Update github actions ci vcpkg cache on msbuild update (hebasto) #17806 Change filemode of rpc_whitelist.py (emilengler) #17849 ci: Fix brew python link (hebasto) #17851 Add std::to_string to list of locale dependent functions (practicalswift) #17893 Fix double-negative arg test (hebasto) #17900 ci: Combine 32-bit build with centos 7 build (theStack) #17921 Test OP_CSV empty stack fail in feature_csv_activation.py (theStack) #17931 Fix p2p_invalid_messages failing in Python 3.8 because of warning (elichai) #17947 add unit test for non-standard txs with too large tx size (theStack) #17959 Check specific reject reasons in feature_csv_activation.py (theStack) #17984 Add p2p test for forcerelay permission (MarcoFalke) #18001 Updated appveyor job to checkout a specific vcpkg commit ID (sipsorcery) #18008 fix fuzzing using libFuzzer on macOS (fanquake) #18013 bench: Fix benchmarks filters (elichai) #18018 reset fIsBareMultisigStd after bare-multisig tests (fanquake) #18022 Fix appveyor test_bitcoin build of *.raw (MarcoFalke) #18037 util: Allow scheduler to be mocked (amitiuttarwar) #18056 ci: Check for submodules (emilengler) #18069 Replace ‘regtest’ leftovers by self.chain (theStack) #18081 Set a name for CI Docker containers (fanquake) #18109 Avoid hitting some known minor tinyformat issues when fuzzing strprintf(…) (practicalswift) #18155 Add harness which fuzzes EvalScript and VerifyScript using a fuzzed signature checker (practicalswift) #18159 Add –valgrind option to test/fuzz/test_runner.py for running fuzzing test cases under valgrind (practicalswift) #18166 ci: Run fuzz testing test cases (bitcoin-core/qa-assets) under valgrind to catch memory errors (practicalswift) #18172 Transaction expiry from mempool (0xB10C) #18181 Remove incorrect assumptions in validation_flush_tests (MarcoFalke) #18183 Set catch_system_errors=no on boost unit tests (MarcoFalke) #18195 Add cost_of_change parameter assertions to bnb_search_test (yancyribbens) #18209 Reduce unneeded whitelist permissions in tests (MarcoFalke) #18211 Disable mockforward scheduler unit test for now (MarcoFalke) #18213 Fix race in p2p_segwit (MarcoFalke) #18224 Make AnalyzePSBT next role calculation simple, correct (instagibbs) #18228 Add missing syncwithvalidationinterfacequeue (MarcoFalke) #18247 Wait for both veracks in add_p2p_connection (MarcoFalke) #18249 Bump timeouts to accomodate really slow disks (MarcoFalke) #18255 Add bad-txns-*-toolarge test cases to invalid_txs (MarcoFalke) #18263 rpc: change setmocktime check to use IsMockableChain (gzhao408) #18285 Check that wait_until returns if time point is in the past (MarcoFalke) #18286 Add locale fuzzer to FUZZERS_MISSING_CORPORA (practicalswift) #18292 fuzz: Add assert(script == decompressed_script) (MarcoFalke) #18299 Update FUZZERS_MISSING_CORPORA to enable regression fuzzing for all harnesses in master (practicalswift) #18300 fuzz: Add option to merge input dir to test runner (MarcoFalke) #18305 Explain why test logging should be used (MarcoFalke) #18306 Add logging to wallet_listsinceblock.py (jonatack) #18311 Bumpfee test fix (instagibbs) #18314 Add deserialization fuzzing of SnapshotMetadata (utxo_snapshot) (practicalswift) #18319 fuzz: Add missing ECC_Start to key_io test (MarcoFalke) #18334 Add basic test for BIP 37 (MarcoFalke) #18350 Fix mining to an invalid target + ensure that a new block has the correct hash internally (TheQuantumPhysicist) #18378 Bugfix & simplify bn2vch using int.to_bytes (sipa) #18393 Don’t assume presence of __builtin_mul_overflow(…) in MultiplicationOverflow(…) fuzzing harness (practicalswift) #18406 add executable flag for rpc_estimatefee.py (theStack) #18420 listsinceblock block height checks (jonatack) #18430 ci: Only clone bitcoin-core/qa-assets when fuzzing (MarcoFalke) #18438 ci: Use homebrew addon on native macos (hebasto) #18447 Add coverage for script parse error in ParseScript (pierreN) #18472 Remove unsafe BOOST_TEST_MESSAGE (MarcoFalke) #18474 check that peer is connected when calling sync_* (MarcoFalke) #18477 ci: Use focal for fuzzers (MarcoFalke) #18481 add BIP37 ‘filterclear’ test to p2p_filter.py (theStack) #18496 Remove redundant sync_with_ping after add_p2p_connection (jonatack) #18509 fuzz: Avoid running over all inputs after merging them (MarcoFalke) #18510 fuzz: Add CScriptNum::getint coverage (MarcoFalke) #18514 remove rapidcheck integration and tests (fanquake) #18515 Add BIP37 remote crash bug [CVE-2013-5700] test to p2p_filter.py (theStack) #18516 relax bumpfee dust_to_fee txsize an extra vbyte (jonatack) #18518 fuzz: Extend descriptor fuzz test (MarcoFalke) #18519 fuzz: Extend script fuzz test (MarcoFalke) #18521 fuzz: Add process_messages harness (MarcoFalke) #18529 Add fuzzer version of randomized prevector test (sipa) #18534 skip backwards compat tests if not compiled with wallet (fanquake) #18540 wallet_bumpfee assertion fixup (jonatack) #18543 Use one node to avoid a race due to missing sync in rpc_signrawtransaction (MarcoFalke) #18561 Properly raise FailedToStartError when rpc shutdown before warmup finished (MarcoFalke) #18562 ci: Run unit tests sequential once (MarcoFalke) #18563 Fix unregister_all_during_call cleanup (ryanofsky) #18566 Set -use_value_profile=1 when merging fuzz inputs (MarcoFalke) #18757 Remove enumeration of expected deserialization exceptions in ProcessMessage(…) fuzzer (practicalswift) #18878 Add test for conflicted wallet tx notifications (ryanofsky) #18975 Remove const to work around compiler error on xenial (laanwj) Documentation #16947 Doxygen-friendly script/descriptor.h comments (ch4ot1c) #16983 Add detailed info about Bitcoin Core files (hebasto) #16986 Doxygen-friendly CuckooCache comments (ch4ot1c) #17022 move-only: Steps for “before major release branch-off” (MarcoFalke) #17026 Update bips.md for default bech32 addresses in 0.20.0 (MarcoFalke) #17081 Fix Makefile target in benchmarking.md (theStack) #17102 Add missing indexes/blockfilter/basic to doc/files.md (MarcoFalke) #17119 Fix broken bitcoin-cli examples (andrewtoth) #17134 Add switch on enum example to developer notes (hebasto) #17142 Update macdeploy README to include all files produced by make deploy (za-kk) #17146 github: Add warning for bug reports (laanwj) #17157 Added instructions for how to add an upsteam to forked repo (dannmat) #17159 Add a note about backporting (carnhofdaki) #17169 Correct function name in ReportHardwareRand() (fanquake) #17177 Describe log files + consistent paths in test READMEs (fjahr) #17239 Changed miniupnp links to https (sandakersmann) #17281 Add developer note on c_str() (laanwj) #17285 Bip70 removal follow-up (fjahr) #17286 Fix help-debug -checkpoints (ariard) #17309 update MSVC instructions to remove Qt OpenSSL linking (fanquake) #17339 Add template for good first issues (michaelfolkson) #17351 Fix some misspellings (RandyMcMillan) #17353 Add ShellCheck to lint tests dependencies (hebasto) #17370 Update doc/bips.md with recent changes in master (MarcoFalke) #17393 Added regtest config for linearize script (gr0kchain) #17411 Add some better examples for scripted diff (laanwj) #17503 Remove bitness from bitcoin-qt help message and manpage (laanwj) #17539 Update and improve Developer Notes (hebasto) #17561 Changed MiniUPnPc link to https in dependencies.md (sandakersmann) #17596 Change doxygen URL to doxygen.bitcoincore.org (laanwj) #17598 Update release process with latest changes (MarcoFalke) #17617 Unify unix epoch time descriptions (jonatack) #17637 script: Add keyserver to verify-commits readme (emilengler) #17648 Rename wallet-tool references to bitcoin-wallet (hel-o) #17688 Add “ci” prefix to CONTRIBUTING.md (hebasto) #17751 Use recommended shebang approach in documentation code block (hackerrdave) #17752 Fix directory path for secp256k1 subtree in developer-notes (hackerrdave) #17772 Mention PR Club in CONTRIBUTING.md (emilengler) #17804 Misc RPC help fixes (MarcoFalke) #17819 Developer notes guideline on RPCExamples addresses (jonatack) #17825 Update dependencies.md (hebasto) #17873 Add to Doxygen documentation guidelines (jonatack) #17907 Fix improper Doxygen inline comments (Empact) #17942 Improve fuzzing docs for macOS users (fjahr) #17945 Fix doxygen errors (Empact) #18025 Add missing supported rpcs to doc/descriptors.md (andrewtoth) #18070 Add note about brew doctor (givanse) #18125 Remove PPA note from release-process.md (fanquake) #18170 Minor grammatical changes and flow improvements (travinkeith) #18212 Add missing step in win deployment instructions (dangershony) #18219 Add warning against wallet.dat re-use (corollari) #18253 Correct spelling errors in comments (Empact) #18278 interfaces: Describe and follow some code conventions (ryanofsky) #18283 Explain rebase policy in CONTRIBUTING.md (MarcoFalke) #18340 Mention MAKE=gmake workaround when building on a BSD (fanquake) #18341 Replace remaining literal BTC with CURRENCY_UNIT (domob1812) #18342 Add fuzzing quickstart guides for libFuzzer and afl-fuzz (practicalswift) #18344 Fix nit in getblockchaininfo (stevenroose) #18379 Comment fix merkle.cpp (4d55397500) #18382 note the costs of fetching all pull requests (vasild) #18391 Update init and reduce-traffic docs for -blocksonly (glowang) #18464 Block-relay-only vs blocksonly (MarcoFalke) #18486 Explain new test logging (MarcoFalke) #18505 Update webchat URLs in README.md (SuriyaaKudoIsc) #18513 Fix git add argument (HashUnlimited) #18577 Correct scripted-diff example link (yahiheb) #18589 Fix naming of macOS SDK and clarify version (achow101) Miscellaneous #15600 lockedpool: When possible, use madvise to avoid including sensitive information in core dumps (luke-jr) #15934 Merge settings one place instead of five places (ryanofsky) #16115 On bitcoind startup, write config args to debug.log (LarryRuane) #16117 util: Replace boost sleep with std sleep (MarcoFalke) #16161 util: Fix compilation errors in support/lockedpool.cpp (jkczyz) #16802 scripts: In linearize, search for next position of magic bytes rather than fail (takinbo) #16889 Add some general std::vector utility functions (sipa) #17049 contrib: Bump gitian descriptors for 0.20 (MarcoFalke) #17052 scripts: Update copyright_header script to include additional files (GChuf) #17059 util: Simplify path argument for cblocktreedb ctor (hebasto) #17191 random: Remove call to RAND_screen() (Windows only) (fanquake) #17192 util: Add check_nonfatal and use it in src/rpc (MarcoFalke) #17218 Replace the LogPrint function with a macro (jkczyz) #17266 util: Rename decodedumptime to parseiso8601datetime (elichai) #17270 Feed environment data into RNG initializers (sipa) #17282 contrib: Remove accounts from bash completion (fanquake) #17293 Add assertion to randrange that input is not 0 (JeremyRubin) #17325 log: Fix log message for -par=1 (hebasto) #17329 linter: Strip trailing / in path for git-subtree-check (jnewbery) #17336 scripts: Search for first block file for linearize-data with some block files pruned (Rjected) #17361 scripts: Lint gitian descriptors with shellcheck (hebasto) #17482 util: Disallow network-qualified command line options (ryanofsky) #17507 random: mark RandAddPeriodic and SeedPeriodic as noexcept (fanquake) #17527 Fix CPUID subleaf iteration (sipa) #17604 util: Make schedulebatchpriority advisory only (fanquake) #17650 util: Remove unwanted fields from bitcoin-cli -getinfo (malevolent) #17671 script: Fixed wget call in gitian-build.py (willyko) #17699 Make env data logging optional (sipa) #17721 util: Don’t allow base58 decoding of non-base58 strings. add base58 tests (practicalswift) #17750 util: Change getwarnings parameter to bool (jnewbery) #17753 util: Don’t allow base32/64-decoding or parsemoney(…) on strings with embedded nul characters. add tests (practicalswift) #17823 scripts: Read suspicious hosts from a file instead of hardcoding (sanjaykdragon) #18162 util: Avoid potential uninitialized read in formatiso8601datetime(int64_t) by checking gmtime_s/gmtime_r return value (practicalswift) #18167 Fix a violation of C++ standard rules where unions are used for type-punning (TheQuantumPhysicist) #18225 util: Fail to parse empty string in parsemoney (MarcoFalke) #18270 util: Fail to parse whitespace-only strings in parsemoney(…) (instead of parsing as zero) (practicalswift) #18316 util: Helpexamplerpc formatting (jonatack) #18357 Fix missing header in sync.h (promag) #18412 script: Fix script_err_sig_pushonly error string (theStack) #18416 util: Limit decimal range of numbers parsescript accepts (pierreN) #18503 init: Replace URL_WEBSITE with PACKAGE_URL (MarcoFalke) #18526 Remove PID file at the very end (hebasto) #18553 Avoid non-trivial global constants in SHA-NI code (sipa) #18665 Do not expose and consider -logthreadnames when it does not work (hebasto) Credits Thanks to everyone who directly contributed to this release: 0xb10c 251 4d55397500 Aaron Clauson Adam Jonas Albert Amiti Uttarwar Andrew Chow Andrew Toth Anthony Towns Antoine Riard Ava Barron Ben Carman Ben Woosley Block Mechanic Brian Solon Bushstar Carl Dong Carnhof Daki Cory Fields Daki Carnhof Dan Gershony Daniel Kraft dannmat Danny-Scott darosior David O’Callaghan Dominik Spicher Elichai Turkel Emil Engler emu Fabian Jahr fanquake Filip Gospodinov Franck Royer Gastón I. Silva gchuf Gleb Naumenko Gloria Zhao glowang Gr0kchain Gregory Sanders hackerrdave Harris hel0 Hennadii Stepanov ianliu Igor Cota James Chiang James O’Beirne Jan Beich Jan Sarenik Jeffrey Czyz Jeremy Rubin JeremyCrookshank Jim Posen John Bampton John L. Jegutanis John Newbery Jon Atack Jon Layton Jonas Schnelli João Barbosa Jorge Timón Karl-Johan Alm kodslav Larry Ruane Luke Dashjr malevolent MapleLaker marcaiaf MarcoFalke Marius Kjærstad Mark Erhardt Mark Tyneway Martin Erlandsson Martin Zumsande Matt Corallo Matt Ward Michael Folkson Michael Polzer Micky Yun Chan Neha Narula nijynot naumenkogs NullFunctor Peter Bushnell pierrenn Pieter Wuille practicalswift randymcmillan Rjected Russell Yanofsky Samer Afach Samuel Dobson Sanjay K Sebastian Falbesoner setpill Sjors Provoost Stefan Richter stefanwouldgo Steven Roose Suhas Daftuar Suriyaa Sundararuban TheCharlatan Tim Akinbo Travin Keith tryphe Vasil Dimov Willy Ko Wilson Ccasihue S Wladimir J. van der Laan Yahia Chiheb Yancy Ribbens Yusuf Sahin HAMZA Zakk Zero As well as to everyone that helped with translations on Transifex. View the full article
  22. style="margin: 0;color: black;"> View this email in a browser BitMEX Crypto Trader Digest May 22, 2020 From the desk of Arthur Hayes Co-founder & CEO, BitMEX From The BitMEX Research Desk Life with SARS-CoV-2 Abstract: The following article is written by guest writer, Leo Weese. Leo explains the potential long term impacts of COVID-19 on culture, work, health and the economy & finance. He concludes by saying that some jurisdictions like Hong Kong or Singapore may attempt to eradicate the virus, while others in the West may attempt to slow it down such that health systems can manage. The changes we are seeing today may be more permanent than some expect. (Propaganda image on display in Sham Shui Po, Hong Kong) Ethereum 2.0 Abstract: We examine Ethereum 2.0, which is set to launch as early as July 2020, assuming there are no further delays. However, the launch may not be as important of an event as it sounds. Initially, Ethereum 2.0 will mostly operate as a test network for the new proof of stake consensus system. Most of the economic activity and smart contracts will remain on the original Ethereum network, which will continue to exist as a parallel system to Ethereum 2.0. There will be a one way peg, where Eth1 can be transferred into Eth2, but the reverse will not be possible. Given the decision to scale via sharding, we believe Ethereum has little choice other than to attempt this incredibly complex multi year transition to a new network. (The Shard building in London) From The Desk Of Arthur Hayes In The Beginning There Was House (Source: Space Ibiza Nightclub) In the beginning there was Jack. And Jack had a groove. And from this groove came the groove of all grooves. And while one day, viciously throwing down on his box, Jack boldly declared "Let there be house!" And house music was born. I dream of thumping house music, neon lights, and mental disorientation during my daily bike rides or trail runs. Back to reality. A lot has happened since my last missive. My pocket rockets continue to rescue my portfolio from bad bets on energy and shipping. And I continue to put some sheckles to work purchasing optionality, anticipating a stronk dollar. I’m long the following FX options: EURUSD 1.00 strike 1yr Puts USDKRW 1600 strike 1yr Calls USDCNH 8.00 strike 2yr Calls I dabble in equity options as well. The double top near the 62% retracement from the recent low on the SPX speaks to me. It whispers of a 2,200 retest this fall. I also have a cheeky SPY Sep20 220 Strike Put position. I’m perfectly content to be dead wrong on this call. If SPX can rally past 3,000 on its way to retesting its ATH while 30% of the developed world is collecting glorified food stamps, risk on bitches! As an aside, my mother and her family grew up quite poor, and her and her siblings used food stamps. Those stamps were literally physical stamps, and carried with them an obvious visual stigma at checkout. Now that many more use them, it’s a sleek debit card thingy, and you would never know who is on the dole. That’s some economic progress... During the endless downtime of COVID lockdown, I enjoy listening to and reading commentary from various legendary macro hedge fund traders. Stan Druckenmiller’s recent interview with The Economic Club of New York, and a recent interview in 13D with Lacy Hunt are two standouts. The moral of the story is that negative interest rates destroy a banking system. The US bank lobby has kept the negative interest rate barbarians at the gate, but when the Treasury needs to borrow trillions every quarter, why shouldn’t they be paid for the privilege? That is something both Donkeys and Elephants can agree on. It won’t take much for prudish Powell to relent to the base desires of popularly elected demagogues. That’s great news for physical gold and gold miners. When rates go negative in the US, watch this space. Gold yields nothing, which is a usual barb thrown by the economic orthodoxy. But if cash in the bank costs you money, and cash in the mattress can be expropriated by a stark raving mad unemployed gun toting deplorable, then you might want to call Dorothy and take a skip, hop and a jump down the yellow brick road. I quite enjoyed the Real Vision interview with Hugh Hendry. The man is a legend, full stop. The non-consensus view they discuss, of a future where equity skew transitions from put over to call over, is something I will be keeping my eye on. The trade there might be selling crash puts to fund a way out of the money long dated calls in a zero cost manner. I think I’m going to go quite large on that one, but I will walk you through that when I get there. Writing these digests presents an opportunity to spitball my thoughts. Hopefully they remain coherent once they reach my word processor and I catch myself in intellectual fallacies before I do more harm to my capital. Bitcoin Baby Paul Tudor Jones (“PTJ”) is a trader with a capital fucking T. His homage to why inflation is coming and Bitcoin is a possible way to outperform inflation in the coming years is very important because it removes career risk from fund managers owning Bitcoin risk. Let’s step through the career path of the average trader who becomes the average money manager. I use my own journey into financial services and beyond to illustrate my point. I was by no means an exemplary employee or very profitable trader. My background and accomplishments were nothing more or less than average. Attend an “elite” university. UPenn / Wharton is the biggest feeder school into American high finance (with a long aaah sound - if you don’t sound like a douchebag you aren’t saying it right). It doesn’t really matter what your major is or if you learned anything. If you can hold your liquor and socialise well, you can get a job on the Street. Some of the biggest bad asses of 20th century finance went to Penn: Milken, Perlman, Wynn etc. Their names dot buildings and programs (unless they got a little touchy feely and got #MeToo’d). The Deutsche Bank Hong Kong office flew out some sales and trading personnel to host on-campus interviews. At the time, I was the social chair of my fraternity. I threw parties at clubs in downtown Philly as a way to earn money for the house and to have fun. I knew basically every club in the city as I went out Wed to Sat. After the day’s interviews, the bankers invited the kids they liked out to dinner. I made the cut, and was invited to some Philly restaurant with other kids from Penn. After dinner the bankers wanted to go out, during my interview I expressed my love of partying in Hong Kong. As a “test” one of the MD’s asked me to recommend some places to party afterwards. Fast forward, we are all drunk as fuck in a Philly house club downtown. REKT. (This MD got me into the graduate program, and we are friends to this day). Now that you have a junior level trading job, you must survive not getting fired as an analyst or associate. Depending on the bank, around 50%-75% never make it past associate. I made it 5 years into my trading career before I got the axe as an associate. Survival is a combination of choosing the right desk, and not pissing people off politically. I chose equities. Bad call, always choose fixed income. There are exceptions to this rule, but the big dogs trade bonds and credit derivatives. You want risk big enough to blow up the bank. You never will get paid unless you can swing the bat. Getting PAID is an interesting concept in finance. Even a shitty analyst these days makes $100k - $200k per year at a large bulge bracket bank. On average the American banks pay the best, Goldman, JPM, BAML, and Citi. But your curve tops out pretty quick. A very prescient and funny DB deriv sales Canadian once quipped, “everyone has a bullet with their name on it, you are just waiting to get shot”. You need to last long enough to have one or two years where you can make a few million bucks, and then it’s up to how you trade your PA which determines whether you can escape the rat race of a trading floor. Your job consists of doing what you’re told, and making sure people perceive you well. Perception as a competent banker is your most and only important asset. If people in your silo perceive you well, when / if you get let go you can get back into the industry. Assuming you can survive long enough to become a VP, this usually takes 5 to 7 years, now you can start really earning money. You are now up to bat. It’s time to earn some duckets. If you are any good at your job, you become attractive to the buy side as well. This is supposedly the golden ticket. I say “supposedly” because while you can make a lot of money as a hedge fund trader, most hedge funds lose money and these losses are usually out of your control as a common grunt. As the junior trader or PM, you don’t get a cut of the 2% management fee. You get a lower salary than you would on the sell side, and hopefully a much higher bonus. The 2% management fee goes to running the fund, and the leftover is there for the GPs. The goal of asset management is raising assets first, making money second. Would you rather earn 2% on 100 billion under management every year regardless of performance, or 20% of profits assuming you are above your high water mark? If, for whatever reason, you believe that you are such hot shit that you can manage other people’s money and don’t mind the risk, then you break out on your own. Now you get all the points on the package. The only problem is that you need to convince people to hand you their hard earned capital. Nothing about your career path is exceptional in any way. You aren’t a brain surgeon, any type of engineer, or a well-regarded public servant. You went to a nice school, got a well-paying job, and survived. But now you want 2% on AUM and 20% of returns. Potential investors will look at your past returns and work history to form an opinion on whether in the future you can make them money. Again, being average is the goal. To be an average money manager, and by definition most money managers are average, you must zig and zag like the herd. If the herd believes in adj-EBITDA you believe in it too. If the herd believes in purchasing mezzanine CLO’s filled with CCC bonds masquerading as AAA, you slurp that shit. If the herd believes that 7.5 billion people willingly inject themselves with the first ever coronavirus vaccine developed by humanity in under 1 year, you bend over and take it first. And finally, if the herd hates Bitcoin because it is supposedly nothing more than “magic internet money owned by anarchists, drug dealers, and terrorists”, then you shun the best performing asset since 2009. As with all walks of life, there are a few truly exceptional money managers. They first preserve your capital, and second, earn a positive absolute return. PTJ is one of them. Average money managers pour over the writings of the gods, and try desperately to think like they do. But we know in the back of our mind, they are average. They are average and average pays fucking gloriously. Why would you want to be extraordinary and expose yourself to career risk. The exceptional investor invests in heretical themes, and sells once those themes become orthodox. The average investor invests in orthodox themes, and sells once those themes become irrelevant. In 2010 would you believe the Facebook newsfeed to be a more powerful news source and advertising dollar vacuum than the venerable New York Times, Wall Street Journal etc.? In 2020 do you believe that only advertising spend will continue to inexorably rise when 30% of the rich world has no job? 2010 FB IPO opens at $38 (Social Media is media … Heresy) 15 May 2020 FB closes at $211 (Social Media is media … Orthodoxy) 2010 – 2020 Return +455% 15 May 2030 FB ??? (Social Media is media … Stupid lah) LPs and money managers want to believe they go against the grain. But not really. A heretical idea is an orthodox idea entered into early. Being early is as bad as being wrong. Exceptional investors are able to find the financial instrument or portfolio construction that allows them to be early and not lose too much capital in the process. Cheap convexity is hard to find, and that’s why there are only a handful of truly successful money managers. PTJ announced, via an investor letter and Bloomberg fluff piece, that his fund holds futures contracts. Traders always talk their book, once they have truly right-sized their position. The game now is to use the infallibility aura gained from past successes to force the sheeple to convert a heretical idea into orthodoxy. Then you dump on the mother fuckers. So an investing legend announced to the world his fund now owns Bitcoin … futures. Game, blouses. How To Trade It Holding physical Bitcoin in size is risky and difficult. The amount of money spent by the top exchanges on security is non-trivial. Therefore if there is a fiat margined derivative that gives them the same exposure, they hold that instead. Any hedge fund’s prime broker will have an account at the CME. Voila, they can now gain long exposure to Bitcoin. Let’s assume a fund uses zero leverage. The leverage is very low on the CME Bitcoin futures contract anyway. The cost of going long futures and rolling each month will be expressed in the futures term structure or curve. I use back minus front as the roll pricing convention. That means if the roll is positive the curve is in contango. As a result there is a cost to roll each month if you are a long holder and the curve is in contango. If the cost to roll each month is greater than the cost to properly secure a large amount of Bitcoin (assume large is >$100mm notional), then a fund would consider self or third-party custody. I posit that the difference in cost has to be extremely large before it makes sense to onboard the risk of custodying crypto to your fund operations. The thundering herd of wanna-be macro fund managers will be demonstratively evident if the CME curve blows out into a massive contango over the non-US platforms. The CME curve should trade richer than all other Bitcoin futures platforms. The reason is collateral. The dominant Bitcoin perpetual swap and futures are margined in Bitcoin. Some platforms cross margin between USDT and Bitcoin. The CME only allows USD, and some FCM’s margin shorts at over 100%. That is extremely expensive. Futures sellers are arbitrageurs capturing the positive carry (sell futures, buy spot, earn carry, it’s that easy … kinda). They hedge themselves by purchasing spot; however, they must come up with double the amount of capital in some cases to fund their trade. Therefore their ROE is halved relative to a Bitcoin margined derivative at 1x leverage. Also a 1x leveraged short perp swap or XBT futures position is long convexity in XBT terms and mathematically cannot be liquidated regardless of how high the price rises. When the CME allows Bitcoin to be used as margin, the dislocation should lessen but will not disappear. I doubt the CME will lower initial margin from 40% to 1% to match BitMEX and other platforms. Therefore the short side will demand higher and higher premiums to supply the incoming macro hedgies their long Bitcoin exposure. If indeed PTJ nudged his average brethren to follow in his footsteps, any meaningful portfolio allocation will appear in rising CME open interest and a steep contango curve. If PTJ isn’t enough, maybe a few other legends will catch the Bitcoin bug and come play in our “magic internet money simulacra”. Average Ain’t So Bad Being an average fund manager ain’t a bad gig. If you know how to shake your rotund Dorsia-fed belly correctly, 2% of billions can fund a very nice lifestyle. The average fund manager who just bought the index outperformed all the so-called contrarians. That is why many of the greats of yesteryear shutdown. The problem is when your skills are average but your ambition is greatness. That is the definition of career risk. Stay in your lane, and financial services is a kind mistress. Don’t let my musings on my portfolio confuse you that I have any deep insights into the future. I approach my PA as an exercise in intellectual gambling. It keeps me interested in the markets and gives me something to talk about. There is nothing better than finishing a day shredding Hokkaiko Jay Pow, and relaxing in the onsen with your boys talking stonks while sipping on a Sapporo Classic. Now let’s get back to business… And, in this house, the keeper is Jack. Now some of you who might wonder, “Who is Jack, and what is it that Jack does?” Jack is the one who gives you the power to jack your body! Jack is the one who gives you the power to do the snake. Jack is the one who gives you the key to the wiggly worm. Jack is the one who learns you how to walk your body. Jack is the one that can bring nations and nations of all Jackers together under one house. You may be black, you may be white; you may be Jew or Gentile. It don’t make a difference in OUR House. And this is fresh. See y’all mother fuckers at the Clerrrbbb! Risk Disclaimer This article should not be copied or reproduced in whole or in part. The information contained in this article does not constitute research or a recommendation. Neither BitMEX nor any of its affiliates make any representation or warranty, as to the accuracy or completeness of the statements or any information contained in this article and any liability therefor (including in respect of direct, indirect or consequential loss or damage) is expressly disclaimed. This is not providing any financial, economic, legal, accounting or tax advice or recommendations. In addition, the receipt of this article is not to be taken as constituting the giving of investment advice nor to constitute such person a client of BitMEX. Contact Us | Subscribe | Unsubscribe
  23. style="margin: 0;color: black;"> View this email in a browser BitMEX Crypto Trader Digest April 9, 2020 From the desk of Arthur Hayes Co-founder & CEO, BitMEX From The BitMEX Research Desk Inflation Is Coming Abstract: We evaluate the impact of Coronavirus on the economy and financial markets. The response to the virus will mark a significant economic regime change, from monetary policy to central bank funded fiscal expansion. Eventually, there will be one clear winner under this new regime: inflation. Economic circumstances could look like the 1970s, with volatile inflationary expectations. This regime change and inflation will be something financial markets find difficult to tolerate. In this environment, Bitcoin could be given its biggest opportunity, in its short lifetime. (Image modified from HBO’s Game of Thrones: “Winter is Coming” – House Stark) Central Bank Digital Currency Abstract: We analyse the idea of Central Bank Digital Currency (CBDC). We divide the concept into two distinct ideas: i) Banning physical cash, and, ii) Allowing retail customers to have deposits directly with the central bank. We conclude that although in some ways the two policies complement each other, they have vastly different economic consequences. The former would increase credit expansion, and the latter would cause contraction. Due to the deflationary nature of allowing the public to hold electronic deposits at their central bank, we think financial regulators are unlikely to allow these CBDC schemes to succeed in any meaningful way. Who Funds Bitcoin Development? Abstract: We compile a list of the main organisations and individuals funding open source Bitcoin and Lightning development. Based on the data we have compiled, Blockstream and Lightning Labs are the largest contributors to open source development in the space, while as far as contributors to Bitcoin Core goes, Chaincode Labs is currently the largest financial supporter of development. We conclude that the situation is more healthy than it has been in the past, with respect to the availability of finance, transparency, and the degree of distribution among financial backers. Mining Incentives (Part 4): The Impact Of The Halvening Abstract: We evaluate the impact the block reward halving, which is due to take place in a few weeks’ time, may have on the Bitcoin mining industry. Assuming a constant Bitcoin price and excluding the impact of transaction fees, mining industry revenue should fall by around 50%. However, this is not necessarily the case for the network hashrate. The decline in the network hashrate is determined not only by the decline in block rewards, but also the interrelationship between the difficulty adjustment mechanism and the mining industry structure. Based on the current industry structure and assuming the Bitcoin price does not change, we predict that the halvening might cause the network hashrate to decline by around 30% to 35%. From The Desk Of Arthur Hayes Choose your Fiction Forky (Source: Pixar Animation Studios) Shazaam! You snap your fingers and COVID has disappeared, you can exit lockdown and continue on with your life. How do you feel? Are you as optimistic as you were in January? Do you trust your government to put your health and safety first? Do you trust your government to tell you the truth in a timely manner, or will it juke the stats when it suits them? Do you trust the media to speak truth to power? Will you wash your hands once an hour furiously, or blithely touch your eyes, nose, and mouth with zero fucks given? If, once we’re out of this, you can honestly say that everything has gone back to how it was in early January of this year, then happy days. It may well be that we are in for a V-shaped economic recovery. But if, as I believe, your world view has fundamentally changed, the fictions that underpinned your life have shifted dramatically. As we consider the most important price, the price of money and its nature, predicting the collective fiction we believe in becomes of utmost importance. Money, true money, which is divorced from industrial utility, is nothing more than a fiction that allows us to exchange labour and capital efficiently so that real goods and services can be produced. Without this fiction … the conveniences of modern society would cease to exist. There are three prevalent monetary fictions whose interrelationships post-COVID will completely change. Government Fiat, aka The USD = Fiction + Violence We know the USD has value because contracts and taxes owed will be collected at the barrel of a gun if necessary. The dollar derives value from a strong belief the United States can raise taxes to pay back its debts. Gold = Fiction + Physical Scarcity Gold has no widespread industrial use case. It is just shiny, physically scarce, malleable, and has captivated human attention for millennia. Therefore it has value. Bitcoin = Fiction + Cryptographic Scarcity Bitcoin has value because a piece of open source code is collectively run by many guarantees that only 21 million units will ever exist. Therefore it has value. After the senseless destruction of human lives in WWII, the victors sat down in Bretton Woods and created the modern financial system underpinned by the USD. We still are under the yoke of the USD today. The USD used to be worth its weight in gold, $35/oz to be exact until 1971. Tricky Dick wanted to fight a war while giving out goodies at home. Free Shit, Vote for Me! That’s the best way to win any election. However, he couldn’t stomach a run on the nation’s gold so he severed the relationship. Since then, the value of USD has depended entirely on trust. Fast forward to January 2020. The US has the most liquid financial market and is completely open to all capital. All major commodities and trade is priced in dollars. Therefore if you are a country or company doing international business you must have access to those dollars. That’s great for everyone when the beat is going strong. The Federal Reserve has a global obligation to keep dollars in good, cheap supply. That is why they have FX swap lines with the major central banks. The world is short the dollar and only demure academic-looking Federal Reserve governors can provide them. Countries and companies can easily earn dollars by selling knick knacks to rich Americans. 70% of American GDP is driven by consumption. It makes the world go round. Hundreds of millions of peasants have been lifted out of abject poverty so that they can produce cheap iPhones, AirJordans, or F150s, all so the parent “American” company can enjoy record profit margins. Europeans are not far behind in their consumption. Europe and America combined represents the global demand for goods. Absent them, who the fuck is going to buy this dog shit at insane markups? Deng Xiaoping on his Southern Tour unleashed the Chinese upon the world after a hundred year hiatus. They began powering the luxury goods, travel, and education sectors after gaining serious wealth from the offshoring of manufacturing from West to East. Sorry for waxing philosophical, I’m no modern day Thoreau and I certainly don’t live on a pond. Keeping it simple: China sells shit in dollars that Americans and Europeans buy. Uh oh, COVID... China shut down production to fight the virus, meaning no dollar income. Then Americans and Europeans caught it and shut down their economies, meaning no more demand. Once China “opened” again for business and started making stuff, there were no orders from the West as they were all watching PornHub at home and ordering GrubHub. If they aren’t vegging-out, they’re worried about when their next paycheck will arrive to pay for fuck-off expensive medical care. The moral of this sorry tale is that China ain’t earning dollars. And they are not alone. No major manufacturing or services hub is earning any dollars. But they need them to pay for raw commodities and to pay back their dollar liabilities. It would be all gravy if their central bank could print dollars, but Mon Dieu! They cannot lah. A mini EM currency meltdown occurred at the tail end of March. The Fed’s response was to offer swap lines to additional central banks, but not China. That has eased the pressure a bit. But take a look at the CDX EM HY CDS spread. It looks like a West Hollywood blowout hairdo. The conventional wisdom is that the Fed can print money until the dollar gets cheap enough. But US banks tend to hoard USD and refuse to lend. There are a variety of regulatory reasons why they cannot, and why take the risk during a global depression. Better to be safe and make sure your balance sheet is rock solid. Simple simple. The Fed can print as much USD as it likes, but the companies and countries that need it the most will not get it. The most important one is China. China’s currency is not convertible and in the eyes of Western Europe and America, it was responsible for this virus. Whether that is true or not is not the point. Do you think for a second any US politician would stand up and ask the Fed to print money so the Chinese economy can survive the COVID pandemic? The virus supposedly originated in a Wuhan live animal market. The West believes Beijing downplayed or lied about its severity. Then, all of a sudden, it shut the country because it was a serious problem. Too bad a few million infected Chinese travelled the world and started the party. Truth is not the point here; the narrative rules all. This is an election year, and China bashing is in full swing. Cue The Seinfield Soup Nazi, “No dollars for you”. The USD is STRONK and will destroy the global economy. The only country that can credibly enact the appropriate amount of fiscal stimulus to weather the storm is the US. No other country has the option to depreciate their currency to the degree necessary to generate economic activity at a level which honours the credit in the system and promises to their plebes. Remember that all raw commodities are priced in dollars, if you print too much money to monetise your government debt, your currency craters and inflation runs rampant. At that point, the Jacobins enter the street and you better not be munching on a cake. That summarises how I see events playing out over the next decade. I have no idea on timing, but the strong USD will break the back of the global economy and force a reset. The question is what the new system will look like. Gaze into my portfolio to see my soul: Long USDCNH 2y 8.00 calls Long USDKRW 1y 1600 calls Long CDX EM CDSI Sprd (I don’t have this on yet, but I’m waiting for my levels on the rebound in markets) Central banks will devalue against a hard digital asset. What that digital asset is, I have no clue. But, it may include a linkage to bitcoin. The USD fiction is over. It’s time for a new mental crutch. Do you believe in Physical or Cryptographic scarcity? After a societal fetish for all things fiat, the pendulum will swing wildly towards what is hard and scarce. Traditionally investors expect a weak gold or bitcoin price when the dollar is strong. But dollars cannot be had, and trust in government Frankenstein currencies will evaporate. Gold is the historical best choice. It also is widely owned by central banks. The best way to rebase a currency is an extremely high gold price. This happened during the 1970’s oil crisis, and the Fed raised interest rates to a level where it became silly to own gold when you could earn 20% investing in US Government debt. This time around, the Fed cannot raise rates. That would destroy the finances of the USG who must hand goodies to all. Remember this is now QE 4 Da People / QE 4eva. The US electorate will not tolerate another exclusively financial services bailout. They will get paid to sit at home, watch NetFlix, aka the Tiger King, and refrain from using their assault rifles to initiate a modern day Whiskey Rebellion. Therefore, there is not an alternative asset that entices people away from gold as the legacy of Bretton Woods system breaks down. The stock market of the Land of the Free will become a political tool. The US Treasury powered by the Fed will buy all government and corporate debt. They will buy equities. They will buy consumer loans. You would think that stocks are the place to be if the government is buying the Index. But let’s remember the Nikkei in 1989. The BOJ now owns upwards of 30% of the Japanese equity market, and the Nikkei is still 50% below it’s ATH. And I’m only speaking in nominal terms. Try deflating that by the BOJ balance sheet … REKT. The once mighty US stock market will be a corral of zombie big corporates who had the connections to suck from the teat of the US tax payer. That wouldn’t be so bad if inflation can be kept at bay. However, as the world recovers we have an infinite amount of fiat currency chasing a finite supply of real goods. SMEs represent 60 - 80% of most countries' economies. These companies, due to their small size and limited connections, pay a high price for credit if it can be obtained. Even with all the well meaning government SME lending programs, a large portion of SMEs will no longer be in existence by the time they can actually access the funds. Complex systems do not recover in a linear fashion. Therefore, an infinite amount of pledged fiscal and monetary assistance will chase non-existent supply. That leads to inflation. Global stock markets will also become political tools, not efficient allocators of capital. The wrong signals will be sent, the wrong goods will be produced. Can the hipsters handle a $40 smashed avo toast? The best inflation hedge of human civilization to date, gold, will be repriced higher. It’s the only thing you can own if you believe in Fiction + Physical scarcity. How high can it go? Take the ratio of the total amount of credit to base money. That multiplier serves as guidance to a possible future for gold. Another possible outcome is the creation of a digital financial non-USD dominated system. If they dare to come out in the open field and defend the [dollar] standard as a good thing, we shall fight them to the uttermost, having behind us the producing masses of the nation and the world. Having behind us the commercial interests and the laboring interests and all the toiling masses, we shall answer their demands for a [dollar] standard by saying to them, you shall not press down upon the brow of labor this crown of thorns. You shall not crucify mankind upon a cross of [the USD]. - Satoshi Nakamoto’s Democratic Convention Speech 2020 Will a cabal of central banks rebase their currency using a digital hard crypto? Maybe. Could there be a basket of digital fiat currencies where the central banks hold a sufficient amount of gold? Maybe. All I know is the setup for bitcoin, the hardest form of digital money, could not be better. All manners of trust have evaporated. In order to solve for demand and supply destruction, governments will embark on the greatest fiscal stimulus binge the world has ever seen. It will not be paid for by tax receipts, it can’t be because 30% of the population is out of a job, it will be paid for by the printing press. The kicker is that, in order to hand money directly to the people, governments will have to digitise their currencies. That will educate the populace on digital money. Once they understand fiat digital money, they will seek out the hard version to avert the ravages of inflation. If you believed that Libra could educate the masses on the joys of digital currencies, just imagine when everyone on Basic spends their food stamps via a mobile app. Remember, the supply of goods will be insufficient because of the SME destruction during the global shutdown. Inflation in what you need, deflation in what you want. Digital finance meets wealth preservation equals Bitcoin. ‘Nuff said. That was a lot of words to get to that conclusion. Now let’s trade it. Correlation One In a global margin call, the market will find leverage and punish it. In a global margin call, all liquid assets will be sold to finance holdings of illiquid ones. In a global margin call, correlation = 1. We are in the midst of a global margin call on all risky assets. The reason why every asset class gets the stick is that weak hands used leverage to juice their short volatility strategies. The BitMEX open interest halved. Leveraged traders got carried out. Platforms who lent dollars to miners against bitcoin (errbody needs dollars), force sold as the market puked. Leverage was punished, just like in every other asset class. However on a relative basis, Bitcoin in Q1 still outperformed the S&P 500. Its correlation with SPX reached a local high. Leverage was extinguished on the downside. The BitMEX XBTUSD swap open interest is rebuilding slowly and, as traders get their sea legs and inflation expectations adjust, the search for inflation hedges will begin in earnest. This is Act One of a global rebalancing. Every pocket of pricing distortion brought about by leverage will be exploited. Buy the dip at your peril. Bitcoin will be owned unlevered. Could the price retest $3,000, absolutely. As the SPX rolls over and tests 2,000 expect all asset classes to puke again. As violent as the Q1 collapse in asset values was, we have almost 100 years of imbalances to unwind the ancien regime. My end of 2020 price target remains $20,000. Everyone knows the shift is upon us, that is why central bankers and politicians will throw all of their tools at this problem. And I will reiterate, that is inflationary because more fiat money will chase a flat to declining supply of real goods and labour. There are only two things to own during the transition to whatever the new system is and that is gold and bitcoin. If you think I’m full of shit, or a stark-raving Cassandra, remember what you believed in pre and post-COVID. Can your mental model revert back to January 2020? I will take my inflation adjusted pocket rockets (gold and bitcoin), and call your Bretton Woods seven two off suit. All in, mother fuckers. Risk Disclaimer This article should not be copied or reproduced in whole or in part. The information contained in this article does not constitute research or a recommendation. Neither BitMEX nor any of its affiliates make any representation or warranty, as to the accuracy or completeness of the statements or any information contained in this article and any liability therefor (including in respect of direct, indirect or consequential loss or damage) is expressly disclaimed. This is not providing any financial, economic, legal, accounting or tax advice or recommendations. In addition, the receipt of this article is not to be taken as constituting the giving of investment advice nor to constitute such person a client of BitMEX. Contact Us | Subscribe | Unsubscribe
  24. Световната криза, причинена от корона вирусът и надутият финансов балон, е вероятно повратния момент за биткойн по пътя му на световна резервна валута. Материалът Мокрият сън на всички биткойн фенове се сбъдва…. е публикуван за пръв път на Hash.bg. View the full article
  25. style="margin: 0;color: black;"> View this email in a browser BitMEX Crypto Trader Digest March 12, 2020 From the desk of Arthur Hayes Co-founder & CEO, BitMEX From The BitMEX Research Desk January 2020 Report Into The Cryptocurrency Exchange Industry (From CryptoCompare) Abstract: For the second time, we present CryptoCompare’s in-depth report into the cryptocurrency exchange ecosystem. The review focuses on spot exchange volumes, crypto derivatives trading data, market segmentation by exchange fee models and crypto to crypto vs fiat to crypto volumes. There is also an analysis of bitcoin trading into various fiats and stablecoins, an additional overview of top crypto exchange rankings by spot trading volume, as well as a focus on how volumes have developed historically for the top trans-fee mining and decentralized exchanges. Figure 1 – ETH Daily Perpetual Futures Product Volumes From The Desk Of Arthur Hayes Tradin’ in My Jammies Bananas in Pyjamas (Source: Australian Broadcasting Corp) Tuesday, March 3rd I’m in my jammies at an urban ryokan in Tokyo about to PTFO. Before I descend into dreamscape, I must call my banker and attempt to place an investment grade index CDS (credit default swap) trade. Unlike crypto, I can only trade this index during US market hours. Therefore, I’m holding my phone like a schmuck trying to put a limit order in for the open. This ryokan vibe and the yukata have put me in a reflective mood. I read a piece in Global Macro Investor in early February, and all I have thought about since is buying IG CDS index protection. The article made me pick up the phone to my banker to ask if I could trade CDS. Following an hour long teach-in, I was almost cleared. I had to physically sign some docs, which was difficult because I have been spending the better part of this northern hemispheric Winter in the mountains of Japan. Last month, the index was at 44bps. Now it’s trading north of 70bps, and since the corona fear spread the trade has ripped in my face. Wednesday, March 4th The G7 have spoken, and things didn’t work out quite like I’d expected. I thought the markets might calm and trade higher on hopes of a further central bank stimulus. And then the IG index spread might tighten before hitting my bid. The Fed freaked and announced an emergency cut of 50bps. All the market could do is shrug and buzz the Bogdanoff twins to continue the dump. Luckily I got filled on my CDS. This is the day I decided in my head the central bank omnipotence bubble popped. Many market commentators have arrived at the same conclusion and expressed themselves eloquently on various blogs and research pieces. But you have to personally believe before you spring into action. This might as well be my religion du jour. It’s go time. I loaded up on some USDCNH 24 month 8.00 calls and some HYG Dec 20 65.00 puts. I thought the China and US high yield corporate credit would be feeling max pain in the upcoming deflationary disco. I also dumped my energy ETFs and bought some more uranium and gold miners. My portfolio is losing money. But y’all really don’t care about what traditional assets and exotic derivatives I am trading. What you want to know is When Lambo? When Moon? I put this out there to describe my current state of mind. Nothing shows the true nature of a trader’s soul than what is and what is not in his portfolio. Thursday, March 12th I’m writing this in steamy Singapore. The energy complex is reeling from the Saudi vs. Russia oil price prize fight. Europe is about to look like Wuhan, and Trump just announced the US would refuse flights from continental Europe. Shit is getting real. So while you are hunting for toilet paper, surgical masks, and hand sanitizer let’s talk about how our fearless leaders will “Protect” us … maybe? And how the high priests of finance will stimulate the economy in the face of a global twin demand and supply shock. Fiscal Policy to the Rescue The Fed meets again next week. They are almost out of bullets. They only have 100bps of room left before rates hit zero. They can obviously take rates negative, but as we have seen with various other central banks it is not very effective. Since the narrative has turned on them quickly, I say the Fed should “Relax”, in the words of Duran Duran, for what is sure to come. But no one really knows whether or not monetary policy can cure a simultaneous supply and demand shock. Fiscal measures like the Make Work projects and other transfer payments are more difficult, politically, to implement these days. Central bankers, due to an aura of invincibility and perceived independence, can change course unilaterally and quickly. That is why, since the GFC, policy makers have leaned on them to jumpstart the economy. The central bank pontiffs are no more effective than the European barber-surgeons of the Middle Ages. If a twin demand and supply shock affects the global economy, then rate cuts can do nothing to staunch an economic bloodletting. Once they are done, rates will go to zero everywhere. That is obviously very bullish for certain safe haven assets. Gold, sovereign credit, and possibly Bitcoin will be buoyed by more liquidity. Bitcoin is more a question mark than a certainty. I believe it will perform well with more liquidity sloshing around the system, but that needs to be proven. The real inflation will only begin once governing bodies get religious about fiscal policy, and the only two governments that matter in this situation are China and the US. In China, Beijing will abandon their efforts to contain credit growth in order to make sure economic activity hits their 2020 GDP targets, which I believe are around 6%. They will allow banks to lend to SOE’s that build infrastructure, and lend to private real estate companies. Most of these projects will be wasteful and inefficient, but the numbers will be hit and jobs secured. The externalities will be comrades rushing to their favourite inflation hedge. Apartments are already extremely expensive relative to median income, and food inflation is up and to the right. Those on the wealthy coasts definitely know about Bitcoin, and I expect the OTC trading platforms to receive large inflows of RMB seeking a home in the large cap magic internet money manifestations. Because the PBOC shut down the visible BTCCNY order books, they can claim with a straight face that on the margin Chinese punters are not expressing their fear of inflation and distrust with the government via their purchases of Bitcoin. Fine by me as long as number go up. In America, Trump is fighting for his political life right now. He underplayed the seriousness of the virus. But Joe sixpack (definitely not his stomach, check the fridge first), is on high alert because now the televised spectacle of tall men dribbling balls is cancelled. Trump loves debt, and will launch some sort of fiscal bazooka in an attempt to keep the SPX at all time highs. Imagine this: in American society where both parents work, what happens when schools close? Can cash strapped families afford daycare? Will daycares even open? What about single parents, how will they cope? Even if parents now work from home, imagine the productivity drain. It’s very difficult to work and take care of bored children. Maybe pharma companies will get a boost from parents looking to dope their kids into silence. That’s just one example of the troubles facing society as certain services are no longer available due to public health concerns. The conclusion is that consumers won’t be spending, and that is the biggest ill for the American economy. Remember that shortly after 9/11 President Bush encouraged the nation to keep shopping. Taxes won’t be going up … I hope … so in order to fund these programs central banks will directly monetise government debt. All hail Modern Monetary Theory (MMT). Simply, this piece of economic sophistry posits that printing money somehow isn’t bad but generates growth. It will be the academic buttress for direct monetisation of government debt worldwide. The end game is always inflation, then Jubilee. This Debt Jubilee is an admission of failure by governments and central banks and it takes many forms, like the rebasing of global currencies with hard money, such as Gold, or the cancellation of the previous regime’s debts by a new administration. Credit claims that cannot be repaid due to insufficient growth and productivity will be extinguished in some chaotic fashion. This isn’t something that will happen this year, it will play out over the next decade. Jubilee has started in Italy. Mortgage payments are on hold. While that sounds great for homeowners, someone’s debt is another person’s asset. As Russell Buffalino would say, “The Virus; it’s what it is…” It is what it is. I am not a medical professional. I have no idea what the impact will be. Only the narrative matters. And the outpouring of negative sentiment over a demand and supply shock as governments shut their doors and economies is what matters. That fear will be the pin that pops the trust bubble of central bank prowess. Back to Bitcoin Will Bitcoin act as a safe haven as macroeconomic volatility returns? Even though it’s trading below $8,000, Bitcoin has outperformed most global equity indices in 2020. However, you gotta go down to go up. The fear and uncertainty facing humanity is enough to inspire a global margin call. Bitcoin will not escape. While I don’t believe we will revisit $3,000, max pain probably resides somewhere between $6,000 to $7,000 Bitcoin. Any crypto hedge fund that allows quarterly or less liquidity will be getting distress calls. They will be dumping coins into a falling market. That will push the price lower on the margin. I know all you HODLers say you love “cheap coins”, but will you really back up the truck if the S&P is flirting with 2,000? We shall see. As central bank printing presses switch into beast mode, Bitcoin should enjoy a nice run back through $10,000 towards $20,000 by year end. Each central bank will cut rates to zero and announce open ended quantitative easing. But initially just like in 2008 and 2009, what seems like a no-brainer - central bank prints and risk assets like Gold and Bitcoin appreciate - will not transpire. The time to back up the truck is when the futures basis goes flat or negative. That will signal an evaporation of optimism. Then you must surf the tidal wave of free money, and begin buying crypto with both hands. First fill your Bitcoin handbags, then acquire all the other dog shit … even CRipple might pop. Long live volatility, and stay healthy. Risk Disclaimer This article should not be copied or reproduced in whole or in part. The information contained in this article does not constitute research or a recommendation. 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