Liquidity and risk management crucial in trading decisions for smooth entries and protection from adverse conditions.
Options trading strategies like selling covered calls offer opportunities for capitalizing on market movements and tailored risk profiles.
Differing perceptions on Bitcoin and Ethereum's roles in the crypto market reflect contrasting valuations and expectations.
Deep dives
The Importance of Liquidity and Risk Management in Trading
When making trading decisions, liquidity and risk management are crucial factors to consider. Liquidity ensures smooth entry and exit from trades, while effective risk management protects traders from adverse market conditions. For example, in March 2020, leveraging positions with a buffer due to pricing discrepancies led to advantageous outcomes.
Benefiting from Options Trading Strategies
Using options trading strategies, such as selling covered calls during volatile periods, can provide opportunities for traders to capitalize on market movements. By understanding the flows and behaviors in the options market, traders can leverage strategies that offer cheap leverage and tailored risk profiles.
Divergence in Crypto Market Outlook: Bitcoin vs. Ethereum
The contrasting outlook on Bitcoin and Ethereum reflects differing perceptions of their roles in the crypto market. While Bitcoin is seen as the dominant asset and base currency, Ethereum's valuation may be influenced by overestimating its base money value, leading to disparities in market expectations.
Network Effect and Dominance in Crypto Investing
Investors, like Chamath Palihapitiya, emphasize the importance of backing dominant assets with strong network effects in the crypto space. Bitcoin's established network effect positions it as a primary investment choice, highlighting the significance of network effects in determining long-term success in crypto investing.
Evolution of Bitcoin Perception and Value
Bitcoin's perception has evolved from being seen as a scam to being considered a store of value. The environment in 2017, marked by fear and uncertainty, contrasted with the current perception, where Bitcoin is viewed as more stable and valuable. Institutional investors are increasingly considering Bitcoin for their treasuries, highlighting a significant shift in attitude towards the cryptocurrency.
Challenges and Future of Ethereum and Altcoins
Ethereum and altcoins face challenges in establishing value beyond speculation. Ethereum's narrative as a smart contract platform influences its performance, with market uncertainties impacting its valuation. The competitive landscape, including projects like Polkadot and Cosmos, adds complexity to Ethereum's future. The focus on application layers in cryptocurrencies suggests a potential shift towards valuing platforms based on utility rather than pure speculation.
Today, I sat down with Su Zhu, who is the CEO and CIO of Three Arrows Capital, as well as LightCrypto.
Light is a real crypto OG and one of the largest and most successful prop traders in this space.
We’ve known each other for two years now and I have tremendous respect for his skill and clarity of thought. He’s usually very secretive, so we are thankful that he has recorded his first-ever interview with us. In this conversation, we go very deep into the process and mindset of trading, as well as Su and Light’s current views on the market and how they are positioned going forward.
My name is Hasu, and I’m a researcher, investor, and writer.