At the time of writing, 8:00 pm (Vancouver time July 16th), Bitcoin is staging yet another mini-rally with the price hovering near $1990. Ethereum is also bouncing back with a current price of $160.
On the week, Ethereum is down $80 or 33%. Bitcoin is down $500 or 20%. THAT’S IN ONE WEEK.
At present, my cryptocurrency position is 98% Bitcoin and Ether. The altcoins have been hammered beyond belief with many down more than 50% in fiat terms.
But wait, it gets better. When you trade stocks and you are having a bad day, you know you get a break when the clock hits 1 pm on the west coast of North America. If you are having a bad week, then always martinis on Friday afternoon with sweet oblivion to follow.
Not so with cryptocurrency. Go to bed fantasizing about the new sports car you plan to buy with your investments, wake up in the morning and yell at the wife for racking up the credit card (“But honey you said it was okay”)
One solution is to sell all your cryto at bedtime and buy back in the morning. This is a terrible solution. Or you can do what the pros do.
Hedge.
The four-largest Bitcoin exchange in the world is Bitmex, which deals exclusively in futures contracts for Bitcoin, as well as allowing to trade on margin in other altcoins like Ether and Dash.
It has been around since 2014, and it’s founder Arthur Hayes, has some really neat Youtube videos on arbitrage with Bitcoin when it was $100.
At present, Bitmex is offering two Bitcoin futures contract XBTUSD: 1956.3 (-3.96%) XBTU17: 2026.5 (-2.05%) (taken at 8:20 pm) The difference between the two contracts would take the better part of an hour to explain (although Mr. Hayes tries hard in this video).
Earlier in the week, I immersed myself in the youtube videos, not imaging that I would find them usefull so soon. I picked XBTU17 and I’m also shorting ETHU17: 0.08312 (-1.92%).
