Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Battered Crypto Hedge Fund Three Arrows Capital Considers Asset Sales, Bailout

wsj.com

Post reply on HN
Print view View original

91–100 of 131 posts

Re: Battered Crypto Hedge Fund Three Arrows Capital Considers Asset Sales, Bailout

#91

Post by TuringNYC »

chollida1 wrote: post #32
dcolkitt wrote: post #18

Earlier quoted context omitted.

> Crypto has tried to solve this by strict liquidation rules that tend to make things worse by turning firms into forced sellers This is literally how traditional finance works as well. If you have a leveraged position at a futures or options exchange, you absolutely will be liquidated as soon as your position gets close to being in the red. I 100% guarantee you that the CME or Goldman will not let you "ride things o…

Not really true, collateral is decided at the end of the day and not mid day. You aren't liquidated immediately the moment your needs more liquidity. We wait till the end of the day short of absolute emergencies. I know Amaranth well being in Canada and Calgary specifically at the time:) And for tradfi a typical hedge fund gets a call and is told to post more collateral and they make real efforts to allow the fund to…

>> Not really true, collateral is decided at the end of the day and not mid day.

Depends on your CSA (Credit Service Annex/Agreement) and what the joint agreement was. Also depends on the type of position (daily settled via exchange vs contractual)

Re: Battered Crypto Hedge Fund Three Arrows Capital Considers Asset Sales, Bailout

#92

Post by shuntress »

CapmCrackaWaka wrote: post #78
shuntress wrote: post #69

Is this mostly caused by people coming to grips with the fact that "crypto" is entirely speculative with no actual value? "TradFi" at least has a real floor because "real" money (as in: currency that can be exchanged for goods and services) and "real" investments (as in: shares of companies that provide goods/services) do actually exist. Even if significant portions of the market are driven by speculation. Are we rea…

The physicality of an underlying asset isn’t what makes people trade stocks, commodities, options or anything else. If you’re day trading soybean futures, it’s not the ideal of soybeans that wakes you up in the morning. It’s the money you could make. Bitcoin is a unique speculative asset because it’s value is based entirely on human interest, nothing else. I think crypto is here to stay as a speculative asset class.…

Soybeans exist and people consume them. Obviously you can speculate on whether the price of soy beans will go up or down but they will always (excluding, of course, obviously unreasonable scenarios) have some value because the soybeans themselves have some value.

The producers and consumers of soybeans are extremely likely to continue producing and consuming soybeans even if no one speculates on the value of soybeans. This is the "physicality" or "human interest" in soybeans.

Why would crypto be "here to stay" when there is zero use for it besides speculation?

Re: Battered Crypto Hedge Fund Three Arrows Capital Considers Asset Sales, Bailout

#93

Post by arcticbull »

chollida1 wrote: post #2

The crypto community continues to speed run the history of traditional finance. This weeks lesson is that in an up market its leverage that makes you money and in a down market its the unwinding of leverage that kills you. They are also learning that interconnectedness will hurt more in a downturn. You can be perfectly delta hedged( don't care which way the market moves) and its the counter party risk that will sink…

> Defi is about to find out how hard it is to make money when no one wants to stake.

I have often described DeFi as Decentralized 2008.

Re: Battered Crypto Hedge Fund Three Arrows Capital Considers Asset Sales, Bailout

#94

Post by dgellow »

sgt101 wrote: post #79
lizknope wrote: post #76

Earlier quoted context omitted.

Your link is to an attestation, not an audit, and it was performed by a company in the Cayman Islands that changed its name and is still under investigation by the United Kingdom government https://www.coindesk.com/markets/2022/01/26/tethers-new-acco...

Hopefully you can link to Tether's audit? ???

They have never been audited. They only ever published attentions.

Re: Battered Crypto Hedge Fund Three Arrows Capital Considers Asset Sales, Bailout

#95

Post by FabHK »

WJW wrote: post #11
polynomial wrote: post #5

Earlier quoted context omitted.

Can you explain what you mean by crypto's forced liquidation rules? Not familiar with how that works at all.

Say you have 100 USD, but want to make a bigger bet on crypto than that. You borrow another 900 USD from a crypto lender and invest the 1000 USD in some cryptocurrency. If the currency you invested in goes down by 10%, your original position of 1000 USD will be worth 900 USD, and you will still owe the lender 900 USD so your original 100 USD stake has been lost completely. The lender will then protect their loan by f…

Two things to add:

1. The price of an asset need not be a nice continuous line. It can jump.

2. That's why liquidation occurs not at -10%, but at some point before that, to manage this gap risk. Might be at -7%, or whatever. This reduces, but does not eliminate gap risk. For that, the crypto exchanges have insurance funds.

Re: Battered Crypto Hedge Fund Three Arrows Capital Considers Asset Sales, Bailout

#96

Post by colinmhayes »

logicchains wrote: post #28
charles_kaw wrote: post #22

Earlier quoted context omitted.

Unfortunately, large defi institutions have been advertising to retail investors. Many of whom have not just had a haircut, but their whole head shaved. Government regulation of retail finance is a feature, not a bug.

>Government regulation of retail finance is a feature, not a bug. It's not a bug unless you believe adults should be treated like children and not be able to take the risks they desire or face the consequences of those risks. Anyone investing in DeFi should absolutely have known the risks; it doesn't justify giving the government even more power over people's finances.

I've met enough people to be confident that adults should sometimes be treated like children.

Re: Battered Crypto Hedge Fund Three Arrows Capital Considers Asset Sales, Bailout

#97

Post by ipnon »

ouid wrote: post #61

>Firm’s founders say they still believe in the future of cryptocurrencies. How the fuck is this the subtitle? The firm's founders saying they believe this is evidence of nothing . A responsible journalist would not include it at all. It is journalistic malpractice to make it the subtitle.

A journalist's job is to report the facts. The fact is Davies said he still believes. Seems like good journalism to me!

Re: Battered Crypto Hedge Fund Three Arrows Capital Considers Asset Sales, Bailout

#98

Post by drexlspivey »

vishnugupta wrote: post #80
chollida1 wrote: post #2

The crypto community continues to speed run the history of traditional finance. This weeks lesson is that in an up market its leverage that makes you money and in a down market its the unwinding of leverage that kills you. They are also learning that interconnectedness will hurt more in a downturn. You can be perfectly delta hedged( don't care which way the market moves) and its the counter party risk that will sink…

Take increasing risks in search for higher yield? Check Leveraged trading to ratchet up profits? Check Margin called when the risky bet doesn't pay off? Check Counter party risk? Check Contagion + domino effect? Check Fire sale of decent quality assets putting down pressure on its prices thus hurting the whole ecosystem? Check

What's the counterparty risk?

Re: Battered Crypto Hedge Fund Three Arrows Capital Considers Asset Sales, Bailout

#99

Post by code4life »

DebtDeflation wrote: post #56
chollida1 wrote: post #2

The crypto community continues to speed run the history of traditional finance. This weeks lesson is that in an up market its leverage that makes you money and in a down market its the unwinding of leverage that kills you. They are also learning that interconnectedness will hurt more in a downturn. You can be perfectly delta hedged( don't care which way the market moves) and its the counter party risk that will sink…

>$5,000 BTC and $200 ETH are in site if Tether starts to fail. IMO, pre-2017 prices for BTC (<$1000) returning is inevitable. If Tether fails, then pre-2014 prices (<$100) are more likely. BTC was at $5K a little over 2 years ago, anyone who thinks the bottom is at that level is deluding themselves.

You could be a millionaire if you are right.

Re: Battered Crypto Hedge Fund Three Arrows Capital Considers Asset Sales, Bailout

#100

Post by chollida1 »

martinko wrote: post #62
chollida1 wrote: post #2

The crypto community continues to speed run the history of traditional finance. This weeks lesson is that in an up market its leverage that makes you money and in a down market its the unwinding of leverage that kills you. They are also learning that interconnectedness will hurt more in a downturn. You can be perfectly delta hedged( don't care which way the market moves) and its the counter party risk that will sink…

Would love to see a citation on this.

Sure, on what specifically?
Post reply on HN