The secrets of a quants’ market
Market Report: 21th Sept. 2018 — Subscribe to our newsletter.
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CRYPTO NOTE
The daily view from our desk
A recent trend has emerged where lobsters and octopuses are getting high! Was crypto the drug that brought the demise of this whale? How would you react if you were hit by a car, what if it was driven by Ashton Kutcher? Road accidents will be a thing of the past when we have flying cars, making that trip to the moon a little easier!
THE FEAR OF A DEAD CAT BOUNCE
This was a great week for a bearish market. But why are bulls cautious?
Resilient response to the hacking of Zaif — a small Japanese exchange — where £45 ($59) million were stolen earlier this week? Check. Bullish bounce when, yesterday night, the US SEC — unsurprisingly but earlier than expected — delayed a decision due on September 30th regarding VanEck’s Bitcoin ETF proposal? Check. XRP ripping through all the bears, slowly appreciating 65% in USD value since Tuesday’s technical breakout? Check.
Oh, and not to mention the relaxed reaction to the critical bug that affected some Bitcoin node clients for over two years — patched on Tuesday — which is still making nearly 75% of them vulnerable. Check! So, why are some still cautious when the top 100 projects are up 5.9% over the day and bitcoin looks poised to jump? And when the bullish narrative surrounding the upcoming November launch of Bakkt is finally picking up?
THE SECRETS OF A QUANTS’ MARKET
This was an awful year for retail investors. But how are quants bullying them?
Three reasons. Alex Kruger just covered the technicals and fundamentals here so we’ll focus on the increased level of difficulty. In other words, this market has changed and retail investors are “getting slaughtered” — especially those not focused on learning. In this regard, Anthony Pompliano recently interviewed Travis Kling — founder of a crypto asset management fund and former hedge fund trader — in this very interesting podcast.
You can listen to it or read the transcript, but we want to highlight these seven deadly excerpts you can neatly find here. From understanding how quantitative investors are able to model liquidity on BitMEX and map out where stop orders are placed — allowing them to engineer stop hunts with great precision — to how Asian market makers are using algorithms to pump and dump altcoins, without forgetting the dead cat bounce scenario!
WHAT TO LOOK OUT FOR
Filter the noise and stay ahead of the pack
▪ If you want to understand how the US SEC processes crypto-ETF decisions, Jake Chervinksy wrote a great overview — tweeted just minutes before yesterday’s deferral.
▪ If you want to know what are the next dates looming over crypto markets, take note of the Mt. Gox creditors meeting on September 26, of CME futures expiration on September 28th, and of Frank Chaparro’s cryptic claim that US regulators will “block US investors from using a number of crypto exchanges in the next 90 days.”
▪ Preston Byrne, everyone’s favourite lawyer, shared the latest piece on his curious crusade against centralisation: about why, “for the last time, Ripple Labs created XRP”.
WHAT TO READ TODAY
An insight a day could give you more profits to play
▪ Katherine Wu interviews Jake Chervinsky in Messari’s weekly podcast and the two legal experts go over the US regulators impact on the crypto market in a 17m episode.
▪ You might have heard about the shitcoin waterfall. But what is the Two Token Waterfall? Check Todd Lippiatt’s “liquidity-optimized framework for tokenizing securities”
▪ Jesus Rodriguez shares “ten ideas about security tokens that most people disagree with” to bridge the gap between the vision and reality of the proverbial token economy.
FOUNDATIONAL TRIVIA
Because the building blocks of crypto needn’t be irrelevant
Quantitative investing is all about applying mathematics to automate trading. It originated in the beginning of the twentieth century but became popular in the 1990s as computers made ‘quant’ models more powerful and has slowly made its way into crypto markets.