Here’s a deep New Yorker profile of the man and his crypto ambitions from the more halcyon era of April 2018:
https://www.google.co.uk/amp/s/www.newyorker.com/magazine/20...
Novogratz's Crypto Trading Desk Lost $136M in Nine Months
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Re: Novogratz's Crypto Trading Desk Lost $136M in Nine Months
#22I mean, given how hard cryptocurrencies crashed this year is it really a surprise? The only way for him to make money would probably have been to short everything continuously but seeing how irrational and easily manipulated the cryptocurrency market has been in the past that seems rather foolish. Given his pedigree you'd think he'd know better than to bet on something that's 99% pure unbridled speculation and 1% act…
> Given his pedigree... Novogratz is a fun character and a good fundraiser, but he doesn't have a pedigree as an investor. He became famous (and a billionaire) by taking Fortress public. Under his watch, it then went from $35 to down below $2. After he was demoted, he ran a macro fund there which performed awfully and, in 2015, it was shutdown and he was forced into "retirement".
I was in his office chatting with him a year and a half ago, on the exact day of June or whenever the market hit its bottom, and he called that that day was the bottom. He does things that don't always make a lot of sense to me, but he wouldn't be a billionaire if he wasn't getting a lot of stuff right also.
E.g. he also bought 500k worth of ETH and sold it for 250M. Paid his taxes, bought a new plane, and donated the rest to charity. His LPs might be nervous, but he's probably doing just fine.
Re: Novogratz's Crypto Trading Desk Lost $136M in Nine Months
#23I actually thought given the size of the position, he was part of the group manipulating transactions in order to liquidate at the top. Holding those positions long term doesn't seem smart.
Re: Novogratz's Crypto Trading Desk Lost $136M in Nine Months
#24The article is missing some critical details. What does the fund do? The article suggests they do arbitrage. Those opportunities actually tend to increase when things are volatile. Also while you can lose money doing it you wouldn't expect a precipitous collapse in NAV. If you discover you're slower than everyone else you can shut down. Volumes aren't necessarily correlated to price either, so that isn't entirely con…
I also hear arb is doing fine.
I wonder how it works though. Most exchange APIs are terrible and it is simply not technically feasible to do anything using those APIs.
Also prices at too many exchanges move in absolute lockstep.
Must be private, privileged access to better (internal) APIs, profit sharing, rip the face of "retail" investor kind of deals.
After all the "exchanges" are not really exchanges as we know them in other markets. They're more like forex trading.
I think the crypto market would benefit from a (semi-)regulated impartial exchange where other firms can become members and act as brokers to direct retail flow.
But unless there's some sort of regulation about it it would just be a private business that could kick out any member for any reason. To much risk for the members.
Re: Novogratz's Crypto Trading Desk Lost $136M in Nine Months
#25The article is missing some critical details. What does the fund do? The article suggests they do arbitrage. Those opportunities actually tend to increase when things are volatile. Also while you can lose money doing it you wouldn't expect a precipitous collapse in NAV. If you discover you're slower than everyone else you can shut down. Volumes aren't necessarily correlated to price either, so that isn't entirely con…
This interview[1] sounds like they called bottom at 6k and then the floor fell out: "We thought it was a bear market. I went into it thinking in the long run crypto is going to be a real structural shift in the world and I can just hedge my portfolio. And to be fair, we did a really great job not losing money the first 60 percent down. What you forget is that a market like Bitcoin that’s down 84 percent has dropped 60 percent—and then another 60 percent. That’s where the pain happens. You start buying Ether again, because it’s only $400 after being at $1,300. But then it drops to $100, and you’ve lost 75 percent of your money. We haven’t done horribly in that context, but we’re still down. [...] I did think Bitcoin was going to hold at $6,200. It stayed there for four months. It felt like the selling was finished."
[1] https://www.bloomberg.com/news/articles/2018-12-11/mike-novo...
Re: Novogratz's Crypto Trading Desk Lost $136M in Nine Months
#26“Remember, bubbles happen around things that fundamentally change the way we live,” he said. Ah yes, I remember how beanie babies changed the way we all lived. And tulips, of course. And rhodium? Hmm.
And dot-coms! And real estate! Hmm.
Re: Novogratz's Crypto Trading Desk Lost $136M in Nine Months
#27I like how cryptocurrencies were launched as an alternative to central banking, wresting control of money away from the government and big banks. An open and level playing field that would democratize how people transact financially with each other. And then the first thing the early adopters did was recreate the flawed financial institutions that surround "real" money so that they could pretend to be Gordon Gekko an…
All you have to do is look at the buy/sell curves. Crypto is 80% market manipulation, 19% traders and maybe 1% genuine use.
> All you have to do is look at the buy/sell curves
What the hell are buy/sell curves?
Re: Novogratz's Crypto Trading Desk Lost $136M in Nine Months
#28You can't win in a losing market ( market capitalisation). I explained it to a friend of mine and he didn't want to hear it.
Now we're one year further and he says it will go up again... Some people just don't understand :)
Re: Novogratz's Crypto Trading Desk Lost $136M in Nine Months
#29I like how cryptocurrencies were launched as an alternative to central banking, wresting control of money away from the government and big banks. An open and level playing field that would democratize how people transact financially with each other. And then the first thing the early adopters did was recreate the flawed financial institutions that surround "real" money so that they could pretend to be Gordon Gekko an…
Haven't run the analysis myself (yet - it's awfully tempting), but it seems like you could get rough numbers of this by computing the volume of on-chain transactions (excluding transactions to known exchange wallets) vs. the volume on all exchanges. The idea is that if you're just trading crypto for price increases, it's much more convenient to do this on an exchange where you receive either another cryptocurrency or fiat, while if you're exchanging it for goods & services, there's really no way to do that other than a wallet app. On-chain transactions would also capture the OTC market (where traders make direct arrangements to transact with each other), but you could perhaps avoid that by filtering out large transactions.
Actually, it's pretty easy to run these numbers for a rough ballpark. About $2.1B of Ethereum (22.7M ETH @ $94) was traded across all exchanges in the last 24h. 3 ETH is mined every 10sec or so, so that's about 26K from mining, probably not a large contributor. I don't have good numbers for how much ETH is traded per day, but it's 5.7 TPS, so about 490K on-chain transactions per day. A quick glance at recent transactions shows maybe an average of 0.2-0.3 ETH per transactions (heavily skewed - the vast majority are for 0.01 ETH, and then maybe 1 out of 50 will be a 10 ETH transaction), so that's about 100K ETH/day. The figure of roughly 99% unbridled speculation and 1% actual technology sounds about right.
Re: Novogratz's Crypto Trading Desk Lost $136M in Nine Months
#30This article was published November 28 of this year. From mid-November to now, cryptocurrency exchange rates have fallen by about 50% across the board, with some much higher.
This move took many speculators, including Novogratz, by surprise:
"I did think Bitcoin was going to hold at $6,200," said Novogratz. "It stayed there for four months. It felt like the selling was finished. But then Bitcoin Cash decided to fork again."
https://www.forbes.com/sites/billybambrough/2018/12/12/bitco...
I suspect many of these speculators are betting on a quick recovery. Should that not pan out, Novogratz and many others are headed for a world of pain.
Meanwhile, Bitcoin the technology continues chugging on. The most noteworthy development is the rapid build-out of the Lightning Network scaling solution, but there's a bunch of stuff beyond that which gets almost no attention.