Sad bear is sad; bulls win.
The market races ahead as predicted, but Goddess moon is soon going dark. The new moon is tomorrow on August 8th, and we should be expecting a local peak to form within the next few days if it hasn't already. My guess has been $45k for a while now, which we've pretty much already touched. Looking at the resistance line, there is a significant chance we've already hit the local peak.
Double resistance at $45k stronk.
$45k, 1-2 point play.
I'm going to reboot the fake trading I was doing by hand.
- I'm going to sell one point here at $43507.
- After a 0.1% trading fee that leaves me with $43,463.49.
The tournament rules are as follows:
- Every player starts with 20 blocks worth of assets (5% pieces).
- The default starting bankroll is 1 BTC per block (20 BTC total).
- Custom rules for how much you can risk at a time
Example: (3 points a day traded maximum) - Default 0.1% trading fee.
So specifically this time around I'll give myself 20 BTC split into twenty 5% blocks. Feel free to play along if you like.
Volatility meter.
I'm thinking about making a point system where the person who makes the most money during the trading window might not actually win. This is because right at the end of the trading window, if you were losing you'd make riskier and riskier bets to catch up because there's nothing to lose. This would increase volatility right at the end and make it a crapshoot victory in many cases.
By quantifying volatility into a point score we can reduce this value from the original score, meaning only those who make consistent gains over time would be the winner. This is what I'm going for because this is how people should be trading. We are trying to lower volatility and get stress-free gains over time, not gamble maniacally.
Stopping the copycats
In a competitive Fantasy Bitcoin League it may be difficult to stop players from copying trades by those who have a history of winning. I've come up with a couple ideas to combat this:
1. Making blind bets.
By allowing users to mask their trades with a SHA-256 hash, they can conceal what they've done until they reveal that trade at a later date. Those who never reveal a blind trade are disqualified from winning, so all masked trades must be revealed eventually. I've actually already programmed this functionality on my Pentaskill (Rock/Paper/Scissors) game, but it's been a while since I've taken a look at that code. Shouldn't be hard to copy it over to another setting.
2. Modifying price up/down after someone makes a move.
Masking trades is kind of a pain in the ass, so another way we can stop players from copying each other's trades is if we modify the price of Bitcoin after anyone makes a trade. For example, just now I sold 1 BTC at $43507. If someone were to copy that trade before the price of Bitcoin moved, we could force them to buy at an artificially higher level like $43508, and if someone copied their trade (curation train style) it would go up even further. That way someone that constantly copied other people's trades would always be slightly behind.
Rebalancing
There are a couple ways to play this game. It all depends on when the 5% stacks rebalance. For example, I currently have 19 blocks each with 1 BTC in them, and 1 block with $43,463.49 USD in it. At the moment, this is fine, because each block is worth the same amount, but imagine Bitcoin crashing to say $35k and then buying back in. Now one of my blocks has 1.24 BTC in it instead of 1 BTC.
We can reconcile this difference by either ignoring it and allowing users to buy/sell blocks that are bigger/smaller than 5%, or we can rebalance the extra 0.24 Bitcoin and redistribute it back to the 20 blocks (1.012 BTC in all 20 blocks instead of 19 blocks with 1 BTC and 1 block with 1.24 BTC).
Personally I like the idea of not rebalancing the blocks unless the user requests it, but these are really all options that could be pre-set by the host of the particular Fantasy Bitcoin League we are playing in.
Variables (timeframe)
The biggest variable of a Fantasy Bitcoin League competition would be the trading window. When does the competition actually begin/end? The answer could be a week, month, or even a year depending on what the host of that particular game wanted.
Variable List:
- Timeframe
- Rebalancer
- Copycat penalty
- Starting stack
- Trading limit per day/week
- Trading fee
Non-variables
There are certain things that should be static and unchangeable from game to game. The main one is starting with 20 points (5% blocks) and setting some kind of trading limit per day/week. This locks all players into a tighter box that produces a better network effect of information.
The ultimate non-variable is that we will ONLY be trading the Bitcoin/USD pair. Bitcoin/USD is by far the easiest asset to predict, and there is no reason to even attempt any other pairing because that would greatly dilute the data we receive.
The goal of the Venti Trading System and Bitcoin Fantasy Leagues is to create an environment that produces very valuable information by way of Swarm Intelligence. By limiting the choices that players can make we can better define and organize the information created into something more useful.
The idea behind all of this is to create a system that is superior to HODL strategy. Rather than simply HODLing and performing no action within these volatile markets, we can look at what the winners of the Fantasy Bitcoin League are doing an act accordingly to get free money with low volatility.
After all, this is a very low-risk trading strategy. We are only trading a defined Bitcoin stack, and we are doing it in 5% blocks. Meaning the money we are gambling with by proxy should be a fairly small amount in most cases. The Bitcoin we are gambling with might be only 5% of our total stack, and that 5% would then be cut into another twenty 5% blocks to trade with, meaning every one point trade would only be 0.25% of our total stack in this example.
By greatly minimizing the bankroll we are gambling with, this reduces stress exponentially and creates a situation that allows us to gamble without all the hardcore emotions that are usually involved in such a volatile market. No one's going to break too much of a sweat if they lose 50% of their money on a 0.25% trade. Losing 0.125% of your total stack isn't exactly a nail-biter. That kind of variance happens in crypto every single day.
Conclusion
This post is kind of all over the place and needs to be explained better, but this is something that I've been thinking about a lot more now that Bitcoin volatility is ramping up as we exit the dreaded $30k-$40k consolidation phase.
I think at best we can expect the next two weeks to trade flat during this next bearish period. Personally I expect to test $40k one last time, but you never know what can happen during a potential mega-bubble.
As far as my fake trading is concerned. I'll be setting up a fake limit sell order at $49500. If the price hits that level I'll automatically sell two more block of my stack, as there is a slight possibility we have one last pump up before consolidating for another two weeks. I'll put a 1 week expiration date on that one.
Looks like $40k might get tested again. The market might need a bit better confirmation than we've had over the past week or two. Trading flat underneath $45k or right under the declining the resistance line is the bullish scenario at this point for the next couple weeks, with the ultra bullish scenario being a breakout up to $50k, and the bearish scenario retesting $35k. Again, these is only a prediction for the next couple weeks until we hit the next full moon on August 22nd.
I look forward to flushing out this 20-point trading strategy further in my attempt to make consistent low-volatility gains within this high-volatility market. I haven't been doing any coding recently because this upcoming cross-country move. Have a bunch of other stuff to do. But once I get settled on the East Coast I'll begin my new journey as an employee of the Hive blockchain instead of shit-ass Amazon. Exciting times.