Arbitrage Betting, Trading, Hedging - All You Need To Know
Simple Guide to Bitcoin Arbitrage Opportunities in 2020 ...
16 Best arbitrage betting software of 2020 comparison table
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Save The Whales? Why Big Traders Aren’t That Bad For The Crypto Ecosystem
https://preview.redd.it/yvkxr1lx00331.jpg?width=1080&format=pjpg&auto=webp&s=93419b9e92674f33749c63efacb867353d648519 Whales dominate the crypto seas, and it isn't always a bad thing. Bitcoin tumbled overnight, dropping around fourteen percent within a few hours from around $8,500 to $7,700. With it fell the wider crypto market, as altcoins joined in on the freefall. Whales, a colloquial term for well-financed traders, have been part of the scenery since bitcoin was invented. They play a significant impact on crypto markets, as large movements often cause a domino effect of panic selling or buying, especially bytrading bots. Most traders have become accustomed to these financial leviathans, which remain a highly disliked species. But as long as there’s money to be had, whales aren’t going away any time soon. With markets now bloodier than the ending of Moby Dick, this might be an opportune time to evaluate the mixed benefits which these creatures bring to the ecosystem. What Just Happened? Online gossips linked the recent drop to several heavy whale movements, around half an hour before the sell-off began. The first move was a 25,000 BTC movement to Coinbase. That was followed by a withdrawal of exactly 14,000 bitcoin. Then, 11 thousand morebitcoin was moved from Coinbase to another wallet, and exactly ten million USDTs moved between wallets fifteen minutes later. A panic sell-off ensued, wiping fourteen percent from the price of bitcoin and causing similar drops in most altcoins. The Good When large trades cause a market dump, they present an opportunity to ‘buy the dip’ to those sitting on the sidelines. In the solemn words of future President John McAfee: Again - "Buy the f-cking dip". It will rebound the market. Oh, I'm also obligated to promote Substratum (SUB) and Insurepal (ipl) today. So I just did. Which I would do without the obligation. I helped both. So you know they're good. An artificial 14% discount represents a chance for small traders to make easy profits, if they are confident prices will eventually recover. Whales are too large to combat directly, but individual hodlers can ride the waves they create. Supply And Demand Pressure Furthermore, all healthy markets need short sellers in order to ensure efficient price discovery. Deliberately dumping bitcoin to create a sell-off is not the same as short selling, but in a market like this one it may have a similar effect. Today’s cryptocurrency market offers relatively few ways to bet against bitcoin. Whales’ ability to create downwards pressure leads to a healthier market, with bearish and bullish sentiment baked into the price. Moreover, those big traders also help price discovery. While crypto exchanges often report significant differences in bitcoin prices, most traders do not have the resources to profit from those variations. By arbitraging prices across exchanges, large traders help ensure that crypto prices remain consistent in each marketplace. One can’t help adding that it’s slightly hypocritical to complain about whale manipulation driving prices downwards, since hodlers also enjoy the benefits of whale-related price surges. Most digital asset participants hold long positions, so whereas dips can be painful, everyone gets to enjoy the sudden rises. And 2019 has been particularly kind in that regard. The Bad Crypto markets are not the only markets that suffer the scourge of manipulation. Large and influential traders are in every market, even tightly regulated ones. High-frequency traders on Wall Street have been quote stuffing and front-running client orders for years, and those who get caught are in a minority. For large players, markets are easy to manipulate. Crypto markets are smaller, and therefore even easier to manipulate. Unfortunately, undue influence will always be an inevitable part of any market. The Ugly Being largely unregulated and relatively small, cryptocurrency markets are more prone to manipulation than traditional markets. Not only is it easier to do, there are also fewer consequences. Crypto markets are also more open to newer or naive traders, who are more likely to panic when the market tanks. Manipulation is an inevitable growing pain of cryptocurrency markets and it is like to fade as the markets mature and expand. As long as traders are driven by fear and greed, crypto markets are unlikely to escape the tail flaps of the whales any time soon.
Forkology 301: The Three Tiers of Investor Control over Bitcoin
DanielKrawisz's article Who Controls Bitcoin is a must-read for anyone wanting to understand how Bitcoin is governed. This post builds on Krawisz's point - that investors hold all the cards - by describing in more detail how Bitcoin investors can exercise their control over Bitcoin through a tiered or layered structure of increasing directness and radicalness. Tier 1: Expression of Intent Investors simply make it known, in a credible way, that they support some change (say a bigger blocksize cap), meaning they intend to buy more BTC if the change is made in good time, and sell BTC if it is not. Then there are three ways the ecosystem can react: (i) Core Capitulates: The Core dev team is pressured to up the blocksize cap in Core and does so in a way that satisfies investors. (ii) Competing Implementations Arise: If Core refuses or raises the cap too slowly, other implementations like BitcoinXT spring up and miners - enticed by the additional gains through a higher BTC price - adopt it. (iii) Bitcoin Unlimited Renders the Previous Two Moot: Bitcoin Unlimited is another implementation in development that attempts to dispense with centralized blocksize planning entirely by allowing each user to set their own blocksize cap through a pulldown menu. Set the cap too low and your node might fail to track consensus as larger blocks get into the chain; set it too high and you might waste resources dealing with blocks that will end up orphaned. Users can also set a block depth after which they will accept a block higher than their set limit only if the block gets deep enough in the chain. This mechanism constitutes a kind of built in fork-tolerant logic. Instead of a preset group of developers opining over the "correct" blocksize cap or an ivory-tower scheme of centrally planned "Flexcaps," the blocksize limit is an emergent property of each individual node and miner's cost/benefit analysis and priorities for their own situation, much like the price of graphite. The concept of consensus becomes more fluid, with nodes sometimes objecting to bigger blocks by refusing to relay them, thereby assuming a risk of temporarily falling out of consensus. Somewhat like the English language, consensus on the rules is emergent rather than consensus rules being handed down from Core dev. Instead of "Concur with Core or go pound sand," Bitcoin Unlimited's consensus on blocksize is an aggregate product of each node and miner positioning themselves favorably in the market due to their own calculations of the trade-offs for their unique circumstances. The result is expected to be a soft blocksize limit that grows dynamically as market forces (orphan rates and other incentives), transaction demand, and technology levels change, in a way that maximizes investor satisfaction and therefore BTC price and miner revenue. Miners will up the size of the blocks they mine as transaction demand grows, and as long as they do so conservatively other miners and nodes (all interested in seeing the BTC price rise) will approvingly build on and propagate these blocks. Blocks over the soft limit will be discouraged by most nodes (by definition of the term "soft limit"), but if they manage to get several blocks deep into the chain most nodes will accept them. Miners a take a risk (orphan risk) in producing these slightly oversized blocks, edging forward carefully when they believe nodes will respond approvingly because investors and users are demanding it. If Bitcoin Unlimited catches on, Core and XT's centralized blocksize plans become relics. Investors announce their intent, ideally through a prediction market or futures market but cruder measures would also have an effect, and miners react (conservatively!) through adjusting blocksize cap (and chain depth at which they'll give in and accept an oversized block) through the pulldown menu to rake in those juicy profits. Nodes also have a voice in what they help propagate, with an interest to aid bigger blocks because of their stake in the BTC price as business owners, holders, etc. Tier 2: Fork Arbitrage on Exchanges This case is more radical, but it is only required if a change is too controversial for something like XT's 75% threshold to be relied upon. Here, several weeks/months before the fork is to occur, Bitcoin exchanges prepare futures contracts for, say, coins in Core and coins in XT, and let investors effectively sell their coins in Core to buy more coins in XT, or vice versa. For example if you have 10 BTC, you would of course have 10 Core bitcoins and 10 XT bitcoins after the fork if you took no action, but if you choose to participate in the arbitrage you might sell your 10 future Core bitcoins and use them to increase your future XT bitcoin count to 15 or 20 BTC. Why would it ever be only 15 BTC? This would be the case where you entered the arbitraging late and Core bitcoin futures had already fallen to half the price of XT bitcoin futures, meaning your 10 Core BTC only buys you 5 XT BTC. [For more technical details, see Meni Rosenfeld's How I learned to stop worrying and love the fork, though he doesn't address the futures contract innovation, which further streamlines the process by giving a very strong indication of the winner before the fork even happens.] In almost all conceivable cases a definitive winner emerges (and if not, no other method is going to do any better at determining the winner), and the other fork either dies or becomes a niche alt-protocol coin (not really an "altcoin," since it shares Bitcoin's ledger). The niche coin would likely only arise and persist if there truly were a key tradeoff being made, as some small block adherents argue. In any case, hodler purchasing power is completely preserved by default if they choose not to bet in the "forkbitrage" process, even in the event of a persistent split. This forkbitrage process represents a more direct expression of investor will than in Tier 1. (Also, it may be possible that this process starting up would kick off Tier 1 effects that would allow the more radical measure of forbitrage to be halted early, with the exchanges returning investors' bets.) Tier 3: Spinoff with New Hashing Algorithm This is the most radical, because it is only required in the scenario where "miners go insane" and do something ridiculous like upping the block reward or refusing to implement obvious necessary changes like blocksize cap increases, despite investor support, and where the miners would threaten to 51% attack the investors' chosen fork in the above forkbitrage process. Of course this can only be a short term threat, since the fork winning the Tier 2 forkbitrage process would soon have far more hashpower thanks to far greater market cap, but short term matters when you could be 51% attacked. Here the Bitcoin ledger is copied over to the investors' chosen protocol, so that all holders have the same number of coins (and same percentage of all outstanding coins) in the "new" coin, say a larger blocksize cap coin. The World Wide Ledger is preserved, which is all that should matter to investors, and the "old" Bitcoin is again sold off to nothing or goes niche. Hodler purchasing power is preserved, of course. This is the very purest expression of investor will. Miners can be called a kind of investor, but with some complications. Spinoffs allow investors to circumvent even the miners - a radical measure for outlandish scenarios. Tier 1 lets investors deal with attempted developer control, Tier 2 lets investors deal with controversy, and Tier 3 lets investors deal with pervasive miner irrationality. This is how investors rule the roost. Previous Forkology posts and discussions: Forkology 101 Forkology 201 (guest post by Peter__R)
Hi all, I would like to introduce you all to the first decentralized cryptocurrency hedge fund. It is an exciting time to be trading and investing in crypto. You can also find this announcement on /ethereum. https://www.reddit.com/ethereum/comments/4nwazx/ann_first_decentralized_hedge_fund_ibb_dao A brief history Wen, the founder of ibankbitcoins.com began his start in cryptocurrency with a venture to mine bitcoins in 2014. After KNC miner failed to deliver machines on time, a refund was requested and the refunded bitcoins started Wen’s trading in cryptocurrency. Carrying over 6 years of stock and index futures experience, bitcoin trading became very profitable. We took interest in ethereum since it released, participated in the crowd sale for Augur in the early days. then we started development of IBB DAO in February 2016. What is a decentralized hedge fund? Smart contracts on the ethereum network allows IBB to interact with its token holders through our decentralized autonomous organization (DAO). Functionalities like issuing dividends, reinvestments, vote on proposals are hard coded into the contract and executed on the network. Performance Wen, our technical analyst, has generated over 180% of bitcoin return since 2014 with verifiable record. In addition, his ethereum trades since March is 108%. All trades are non-leveraged, not compounded and equal capital. While Wen focuses on longer term speculative trades, Jimmy, our software dev lead will be rolling out algorithmic trading across exchanges. Short term techniques include, market making and arbitraging. Security and Transparency We take security very seriously. Our first priority before launching is to have a security audit of our code by crypto experts and then open source the ethereum contracts. We plan to implement the following services to our token holders for transparency: Proof of reserve for cold wallet storage. Bit-go proof of reserve on live exchanges. With this, users can observe our fund’s holdings in real time on an exchange. Crypto financial audits by independent firms proposed by our DAO, disclosure of quarterly report on fund performance and holdings. Our crowdsale will start soon, accepting BTC and ETH. Find out more on our website at https://ibbdao.com , learn about our DAO, fund management and past performance record. Ethereum contracts will be released shortly. Edit1: subscribe to /ibbdao for news update. FAQ compiled from questions in the comments
What is the advantage of investing your fund compared to buy and holding ETH/BTC?
Ethereum is in the growing phase coming out of beta. It is definitely profitable to hold on to ETH while it appreciates. However, just like with bitcoin, and traditional asset classes. It can consolidate, stall, turn bearish for an extended period of time. When I started trading bitcoin in 2014, BTC price was 600, it is still ~600 today. During the same period from my performance page, you can see that the fund trades both directions, long and short. Therefore, during a bear market, the fund would actually make value instead of losing value by betting that it will go down. To summarize, the fund's performance is trying to capture the volatility of the price movement, both up and down.
Hard limit on token sales?
While we haven't ironed out all the details for the token offering, we don't have any plans to issue any additional tokens after the sale. We want to build our fund and brand organically and grow. If we do issue, it would be a brand new market segment and a proposal up for vote. It was bitcoin 2 years ago, ethereum now, who knows what people come up with in the future.
Is this related to TheDAO?
The slock.it, TheDAO is not related to us.
What kind of voting can you do with IBB DAO?
While we haven't finalized the details, the voting system can be used to do a few things we have in mind:
Financial auditors are voted by the dao, so we get independent auditors. They also write up the quarterly report.
Vote on the percentage to reinvest the money which will appreciate the tokens or payout.
proposal to fund other ETH funds, projects, alt coin trading. Currently only ETH and BTC
In the off chance the fund need to be resolved.
How do I know this is not a scam/ponzi etc..?
I don't expect you to trust an internet stranger. However, there needs to be some level of trust for devs whether its ethereum or some altcoin. That being said, we have been transparent since 2014. You can easily vet us yourself through our linkin, github, or any past trades. We offer a lot more for transparency compared to other crowd funds in terms of security and proof of reserve measures listed above. In addition, our office is set up in the US which has the one of the most strict security regulations, you can drop by to talk to us. I personally believe in building a brand organically, just like I have with many traders on bitcoinmarkets, angel investors and twitter followers.
I have noticed a lot of the same questions being asked on the discord chat. Please JakeTheCryptoKing, feel free to use this as you see fit. Q: What is a satoshi? Why do we use this terminology? A: The satoshi (sometime abbreviated to sat) is currently the smallest unit of the bitcoin currency recorded on the block chain. It is a one hundred millionth of a single bitcoin. 1 Satoshi = 0.00000001 BTC 10 Satoshi = 0.0000001 BTC 100 Satoshi = 0.000001 BTC 1,000 Satoshi = 0.00001 BTC 10,000 Satoshi = 0.0001 BTC 100,000 Satoshi = 0.001 BTC 1,000,000 Satoshi = 0.01 BTC 10,000,000 Satoshi = 0.1 BTC 100,000,000 Satoshi = 1 BTC When trading, it is helpful to have a reference point. If you have losses or gains measured against BTC, it is easier to calculate your true movement up or down. "You want to improve your total holdings against BTC, not necessarily total $$. The price of 1 BTC will fluctuate, do not focus on that, focus on improving your total BTC holdings." - JakeTheCryptoKing. Q: When should I buy ___? When should I sell ____? Also: Should I sell X to buy moonshot Y? A: Buy the dips. Sell the highs. "I've made it very clear, weak hands fold. (It) is for each individual trader (to decide). I hold until I'm green, but if you feel there is a better opportunity rotate the $$ around!" - JTCK. You will never consistantly pick the all-time-highs or lows. Not even regularly. "You eat the body, but leave the tail and the head" – Daniel Jeffries (https://hackernoon.com/the-cryptocurrency-trading-bible-two-the-seven-deadly-sins-of-technical-analysis-cacd04f916b3). Q: What does ________ (insert acronym/jargon here) mean? A:
HODL. A misspelling of ‘hold’ that stuck around to mean ‘keep’. A crypto trader who buys a coin and does not see himself selling in the foreseeable future is called a hodler of the coin.
FOMO. Short form for ‘fear of missing out’. The feeling when you see a huge green dildo on a chart and you don’t own that coin, so you sell other shit to buy into it freaking out. As crypto trading is still very much driven by emotions rather than valuation, FOMO is a huge factor to consider when swing trading in crypto.
FUD. Short form for ‘fear, uncertainty and doubt’. Usually used in the form of “xxx spreading FUD again.”
4.ATH. Short form for “All-Time High”. Therefore it means the highest historical price of a specific coin. The opposite is ATL "All-Time-Low'.
Whale. A huge player who has a substantial amount of capital. Whales are often the market movers for small alt-coins too due to their huge capital.
Pump and Dump. The recurring cycle of an Altcoin getting a spike in price followed by a huge crash. Such movements are often attributed to low volume, hence the ‘pump’. Traders who pump, buying huge volumes, may wish to invoke FOMO from the uninformed investors and then dump, or sell, their coins at a higher price.
Shill. The act of unsolicited endorsing of the coin in public. Traders who bought a coin has an interest in shilling the coin, in hopes of igniting the public’s interest in that particular coin.
Bag Holder. A term to refer to a trader who bought in at a high and missed his opportunity to sell, leaving him with worthless coins.
Margin Trading. A term for ‘trading with leverage’. In this instance of trading, you borrow one side of the trading pair at an agreed loan rate and sell it for the other side of the trading pair. Depending on the direction you believe the market to move, you may place a long or a short bet on the trading pair of concern.
Long. A position that a trader takes. To take a long position on something is to believe its value will rise in the future.
Short. A position that a trader takes. To take a short position on a coin is to believe its value will fall in the future.
Limit Order. An order placed at a future price that will execute when the price target is hit.
Borrowing Rate. When you open a leveraged position, you will be borrowing coins at a pre-determined rate. This rate will be added to reflect your position’s overall profit and loss.
Lending Rate. Some exchanges have lending accounts. You may deposit your coins into these lending accounts to lend your coins for others to execute their leveraged trades. The lending rate fluctuates throughout the day based on the demand for shorting the coin.
Fill or Kill. A limit order that will not execute unless an opposite order exceeds this limit order’s amount.
BUY / SELL Wall. A wall as seen in the depth chart of exchanges is an amalgamation of limit orders of the same price target
Altcoin “Alternate coin” so it is everything other than Bitcoin (BTC). Bitcoin is the main index for cryptocurrency market. If BTC goes up, other coins go up. If BTC goes down, other coins go down.
Circulating Supply. The price of a coin has no meaning on its own. However, the price of a coin, when multiplied by the circulating supply, gives the coin’s market cap.
Market Cap. A stock’s market cap refers to the market value of the company’s outstanding shares. In the cryptocurrency market, the market cap is used to illustrate a coin’s dominance in the entire cryptocurrency market.
DDOS. Short form for ‘Distributed Denial of Service’. A well-timed DDoS attack at exchanges during volatile movements may be devastating as traders will not be able to execute any order manually and will be at the mercy of their pre-set, or the lack of, limit orders.
ICO. Short form for “Initial Coin Offering”, which takes a page from the usual IPOs investors know. Coins bought during ICOs are usually sold for a profit when the coin first hits exchanges. This is due to the initial hype which increases demand for the coin. On the supply side, ICOs create entry barriers as the buyer has to set up his private wallet to receive the coins from the ICO purchase.
Arbitrage. The act of buying and selling on different exchanges to earn the difference in the spread. Arbitrage opportunities occur due to differences in exchange reputation, community coin preferences and ease of bank funding. Take note that fees, limits and prices could change anytime when you are transferring your coins between exchanges, especially during volatile times.
BTFD “Buy The Fucking Dip” – When people are running around and selling because of fear, this is the time to buy.
Moon Extreme bullish (upward) movement of a coin.
Weak Hands Those who cannot be patient and sell at loss when the market is down.
DYOR Do your own reseach.
Taken from: www.smallcapasia.com/what-is-fud-hodl-or-fomo-in-cryptocurrency-lingo-find-out-more-here/ by James Yeo. Q: Why should I use BTC pairs rather than ETH pairs to buy altcoins? A: General rule is the buy/sell book will be more active with BTC. You may get more altcoin with BTC compared to ETH, and certainly quicker. When you become more experienced, you may find your own methods of evaluating the best trading pair for individual trades. Q: Should I sell my coin I accidently bought with ETH (or other)? A: No. The coin you bought doesn't know how you bought it. What is done is done. Q: What exchange should I be using? A: Many traders use several. Two examples: GDAX and Kucoin. For exchange to exchange transfers, GDAX has lower fees. For newer coins, Kucoin lists some coins not available elsewhere. Q: Should I buy a recommended pick immediately? A: Buy the dips (low point of a coins price). It is prudent to do your own research. Buy when you feel comfortable. Beware!, the more people that hear a tip, the higher the price may immediately spike.
REPOST from November 2015: "Forkology 301: The Three Tiers of Investor Control over Bitcoin - Tier 1: Expression of Intent; Tier 2: FORK ARBITRAGE ON EXCHANGES; Tier 3: Spinoff with New Hashing Algorithm" ~ u/ForkiusMaximus
Tier 2: Fork Arbitrage on Exchanges This case is [...] only required if a change is too controversial for something like XT's 75% threshold to be relied upon. Here, several weeks/months before the fork is to occur, Bitcoin exchanges prepare futures contracts for, say, coins in Core and coins in XT, and let investors effectively sell their coins in Core to buy more coins in XT, or vice versa. For example if you have 10 BTC, you would of course have 10 Core bitcoins and 10 XT bitcoins after the fork if you took no action, but if you choose to participate in the arbitrage you might sell your 10 future Core bitcoins and use them to increase your future XT bitcoin count to 15 or 20 BTC. Why would it ever be only 15 BTC? This would be the case where you entered the arbitraging late and Core bitcoin futures had already fallen to half the price of XT bitcoin futures, meaning your 10 Core BTC only buys you 5 XT BTC. [For more technical details, see Meni Rosenfeld's How I learned to stop worrying and love the fork, though he doesn't address the futures contract innovation, which further streamlines the process by giving a very strong indication of the winner before the fork even happens.] In almost all conceivable cases a definitive winner emerges (and if not, no other method is going to do any better at determining the winner), and the other fork either dies or becomes a niche alt-protocol coin (not really an "altcoin," since it shares Bitcoin's ledger). The niche coin would likely only arise and persist if there truly were a key tradeoff being made, as some small block adherents argue. In any case, hodler purchasing power is completely preserved by default if they choose not to bet in the "forkbitrage" process, even in the event of a persistent split. This forkbitrage process represents a more direct expression of investor will than in Tier 1. (Also, it may be possible that this process starting up would kick off Tier 1 effects that would allow the more radical measure of forbitrage to be halted early, with the exchanges returning investors' bets.)
Arbitrage betting is a sports betting strategy designed to take advantage of pricing discrepancies in the betting markets. It involves placing two (or more) wagers on a single sports event, so that all possible outcomes are covered. Arbitrage betting – Another for word for this is scalping. As each Bitcoin sportsbook releases different odds, bettors can secure better choices where they can manipulate these odds differences. Trading – As sports events get closer and closer to start (e.g. big boxing matches or the start of a league season) odds for each team or player ... 2. A Simplified Example of Arbitraging Bitcoin. Let’s take a simple arbitrage example in order to illustrate how arbitrage is done. At the time of writing, the price of Bitcoin on Bitstamp is $11,561 while the price of Bitcoin on CEX.io is $11,645.. The difference between prices is $84, and this is quite a decent opportunity for arbitraging. Tether (USDT) is a leading stable coin, with a total circulation of 2.826 billion USDT, each being worth roughly USD 1, as of this writing on 22 August 2018.The number of USDT in circulation has skyrocketed by billions of USD in the past year and continues to rise, as it’s become a good alternative to USD on exchanges where USD is not available. Traders are basically betting on other strategies by selling altcoins as being stronger than certain ones. Some altcoins like Tezos are well informed of this and were developed to ensure they can be modified constantly. About Hard fork altcoins. Many altcoins were developed from rough bitcoin forking.
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