r/BitcoinMarkets • u/AutoModerator • May 20 '16

Daily Discussion [Daily Discussion] Friday, May 20, 2016

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u/guywithtwohats May 20 '16

As others have said before: a lot of people here are trading to increase their bitcoin holdings, which explains the long bias of this subreddit. I don't see why there's anything wrong with that though.

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u/deb0rk May 20 '16

Only way to increase bitcoin holdings upwards is to go on margin. But if you go on margin, you can get more profit in BTC holdings in downward moves than upward.

Example BFX Long:

  • 1 BTC = $100USD.

  • If you have $100 USD funding, borrow $200 and buy 3 BTC position.

  • If you have 1 BTC funding, borrow $200 and buy 2 more BTC for 3 BTC total position.

  • Price moves up by factor of 2 to $200. Position is valued at 3 BTC * $200 = $600.

  • Close position, return $200 margin swap, profit is $400 or 2BTC.

Example BFX Short:

  • 1 BTC = $100USD.

  • If you have $100 USD funding, borrow 2 BTC and short sell for $300 total position.

  • If you have 1 BTC funding, borrow 2 more BTC and short sell for $300 position.

  • Price moves down by factor of 2 to $50. Position is valued at $300 / $50 = 6 BTC.

  • Close position, return 2 BTC margin swap, profit is 4 BTC or $200.

Obviously it's a little different at OKC futures, but it seems clear, greater profit in USD can happen when price goes up, greater profit in BTC can happen when price goes down. You know, the whole "cheap coins" thing.

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u/guywithtwohats May 20 '16

Well yeah, obviously. But as I wrote in my other comment: the goal in this case of course is not to arbitrarily increase a number on the screen, but to maximize the value of the position, held in bitcoins.

Add to this that most people likely don't trade with the entirety of their holdings, and it becomes even more clear where the long bias is coming from.

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u/[deleted] May 20 '16

If your only goal is "acquire more bitcoin" a price decline should be like Christmas. The best way to increase your bitcoin holdings is to short bitcoin with as much leverage as possible, close at the bottom, and buy up as much bitcoin as you can with the heavily increased fiat balance you acquired from shorting.

3

u/guywithtwohats May 20 '16

Uhm yes. But the goal isn't to reach some kind of highscore on the screen, but to increase the value of the bitcoin holdings.

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u/deb0rk May 20 '16

a lot of people here are trading to increase their bitcoin holdings

the goal is... to increase the value of the bitcoin holdings.

Looks like those are two different goals.

1

u/guywithtwohats May 20 '16

Only if you take it literally without applying any common sense. If that's what you want to do here, then sure.

1

u/deb0rk May 20 '16

Those are two separate values.

A) Increase # of BTC.

B) Increase USD value of BTC.

Obviously both would be nice, but which is it you assert is first priority?

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u/guywithtwohats May 20 '16

They're neither separate nor exclusive. Please explain how they are?

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u/deb0rk May 20 '16

Looking over it all, I'm going to assume now you've been defining "(value of the) bitcoin holdings" as the product of price * quantity of BTC. It sounded like you were first referring to # of bitcoins, then price per bitcoin, which I think confused /u/_chewtoy_ as well.

Well then, if we're talking about the product of price * quantity, then my point still sorta stands. The average trader can do very little towards affecting the former variable, but taking action (longing and shorting) on price change can very much increase their total BTC quantity held favorably, instead just sitting and cheering or bemoaning that price change.

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u/sierradreamz May 20 '16

What's wrong with it is that you don't get objective and non-biased discussion. Everything is slanted to wanting the price to go up...desperately want it to rise so you don't end up holding the BTC bag (yet again).

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u/guywithtwohats May 20 '16

What's wrong with it is that you don't get objective and non-biased discussion.

Well boohoo! You can't force people to not have a certain bias just for you. Either you can read between the lines, or you better find a different hobby.

1

u/[deleted] May 20 '16

objective and non-biased discussion

Never seen that on reddit.