A few years ago I was listening to Caitlin Long. She predicted that some day a major conventional bank or investment firm would get caught flat footed and get rekt by a crazy bitcoin move up or down. Today I let my imagination run wild. Here's what I thought:
- BlackRock, Fidelity, and the other big players are using derivates to hedge their bitcoin positions. Their goal is to stifle volatility and control the fiat price.
- All these companies operate Monday through Friday. They have never witnessed an enormous weekend move.
- Trump starts talking at the Bitcoin Conference at 2:00pm. He makes some outrageously bullish promise. Word spreads. MAGA world goes crazy.
- The price pumps like only bitcoin can. Word spreads.
- Enormous shorts get eliminated. The big boys are forced to cover, further causing bitcoin to skyrocket.
- Coinbase crashes. The price plummets,and bitcoin returns to where it started.
- A few big institutions fail.
Ridiculous? Probably. But it would be fun.
It'd need to be a non-TBTF bank for the above, so none of the big money center banks.
Although I don't care about volatility but today I was laughing just looking at the Bitcoin price go wild! I didn't know that it was due to Trump otherwise I could laugh a bit more. He talks so much big things and is looking mad for Bitcoin at the moment
It's exactly my fantasy as well!! Again a great write up!!
Isn't it a fashion whenever volatility hits?
Always.
No one can't predict the bitcoin's storm. But, Nice one.
Here is another fantasy scenario that could play out:
That would be a fun day indeed, as long as that "in kind" ETF let's us know their plan here on @sn first.
lol that would be funny to witness a weekend move up 10K or something like that. But normal have a tick like that, often it reverts to the original position for a while. Or you see, abnormal ticks on the hourly.
This is funny
Another Gamestop? Anything is possible, they havent even been through one bear market yet.
if all the MAGA that exist now would cost at least 1 dollar and no bitcoin would be needed.
There would be companies declaring bankruptcy with high market valuations; it would truly be something crazy. The world is not in a position to handle such shocks right now; it would be an explosion of all crises at once. Just imagine if that were to happen.
No matter what happens, there is only one way. Diamond hands 🤲💎 and every time you can buy more, buy! accumulate and accumulate without looking back and without looking at the price in the present time. thanks for sharing your vision
I think BlackRock and Fidelity and the likes finally come to understanding that there is no future without bitcoin, so if they want to mean something in the future they will need to adopt Bitcoin, they don't know how (yet) so ETFs is a "relatively safe" bet for them. But I would not be surprised if they follow Saylor's footsteps and invest heavily in their own BTC. The banks are close second. What stops any Bank today to buy a lot of BTC and start L2 own nodes lightning service and even offer cards next to visa ones, that business model works 24/7 and they get their cut on Sunday's as well.... I think its fear (and know how) and uncertain political climate, if the new government will be BTC friendly they will succeed .... That's the way I see it. The future is bright.
Absolutely fun!
All quite feasible except the big institutions fail part. I don't think huge institutions with multi trillion dollar AUM could fail from being offside a couple billion in Bitcoin hedges.
I think the price drops after Trump speaks unless he makes some outlandish promise like RFK. Huge amount of OI has been added in the past couple days. Which could be short biased but likely more so long biased hoping to catch the kind of wave you describe from Trump's speech.
Your analysis is more likely, and probably more accurate. In the real world I think it's conceivable that a small, undercapitalized copycat hedge fund could get blown out. I'll take what I can get. 😀
Maybe but most of those guys are long spot, short futures so something pretty wild would have to happen.
Sure, go ahead. Walk all over my dreams.
Wouldn’t that be great. And I’d think it’s very plausible too. None of these institutions are invincible.
I still remember the 2008 crash that followed the sub prime mortgages fiasco. It’s not an exact like for like comparison but we did see a number of banks fail as a result of their own stupidity.
I know trading hours are only Mon-Fri, but are they really so vulnerable? I can believe either answer.
Likely not. Most institutions have have only at most tiny BTC positions ¯\_(ツ)_/¯
No doubt this is pure speculation. However, derivates are not only used as a hedge, though that would be a prudent use. That's why people laugh at the term "hedge fund. " You hear the terms net long and net short all the time. That's because these guys are often not hedging. A perfectly hedged position realizes little or no profit. They are overweight one side or the other, because that's how huge gains are made. I'm not looking at the markets right now, but I'm sure there is plenty of derivative action right now. That's the case every day. I agree that it would be crazy for custodians like BlackRock or Fidelity. Little hedge funds? Maybe.
You specifically said
Was this a mistake? That would be okay when you meant to write "speculation" instead. Or are you talking out of your ass without basic understanding of the topic?
What Blackrock and Grayscale do is holding Bitcoin on behalf of customers and extract a margin. They don't care about Bitcoin price - they extract this margin no matter at which price. It would be very weird to own dervatives to either speculate or hedge something here.
You're right. I did write hedge. Regarding speculation, that would be unlikely with the big custodians. This was not meant as a seriously thought out post.
And right at the beginning the price dropped again! I think, people nowadays have so much deep pockets that they placed shorts again and the price went down!
I would like to hear further 😁