YouSaid · the spoken record

Roshun Patel

lines on the record: 61
first: 2021-05-31
most recent: 2021-05-31
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Every single human on the planet is involved in it, and there's now like 300,000 exchanges. Then it gets a little bit more competitive and cannibalistic. But there's like a lot of room there, right? Like, you know, it's like not that many people are using this stuff just yet. We talk about it. But when you look at like this sheer number of people out there, I was listening to like CNBC this morning or wherever, where it's like, yeah, they're like asking people that have never used DeFi if they think DeFi is the future or on-chain is the future. And they're like, no, and then everyone's agreeing like, yeah, like, look, this guy brings up a good point. It's like, you know, no one's using this yet. Like, you know, you're asking people that aren't using it if they think it's real. So I think there's a lot more room to grow and, you know, CFI and DeFi will have a lot of sort of harmony in the future”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“Whether you're an individual or a family office or hedge fund or whatever, you shouldn't have everything be in your control or nothing be in your control. There should be a balance and a ratio. And I think a lot of services like Genesis and other companies in the space are going to kind of be there to help marry that difference and provide that diversification that holders want. But I do think, of course, that yes, DeFi is going to be, it's going to be big in the future. And there's going to be a lot of stuff going on chain. I think another thing to think about when thinking when like kind of looking at the outlook there is like the pie is growing right now year over year, day over day really, where like nothing is cannibalizing into each other quite yet where it's like as long as the market is growing there's more and more stuff to do and trade and more clients are entering and more participants are entering. So as long as that's going on, that's going to be not very competitive and more like sort of collaborative. Of course crypto is at its like finals they were like”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“I think in the long term, there's going to be more of a harmony between centralized finance and decentralized finance. They're going to have to work together in many ways, more so than they are now in order to kind of provide services to the broader marketplace. I do think the future, broadly in ultimate finality speaking, is going to have a lot more on-chain activity than it does now. But I think the way kind of bringing this more high level back to kind of like the user and the participant in the marketplace at the end of the day, they're humans, right? Like, you know, we're all humans. We view counterparty risk to protocols, to exchanges, to really banks, whatever, in different ways, FDIC, non-FDIC, things like that. There's always going to be a need and desire for market participants to have things that are not completely bare because you want that as an asset holder, as like a diversified and responsible.”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“Layer one sort of status, the way I see it. And this is like, you know, maybe there's some cryptographers out there that are going to argue with me on this point in some ways. But I do think at the end of the day, you're going to need applications built on Bitcoin where people are paying to use them so that the miners can be compensated when there's no block reward. And I think how that develops in the future, like, you know, in the past few years, it's really been Ethereum show there. Could that change? I do think so. And do I think it has to change at some point? Yeah, like I think it's going to have to, that market's going to have to develop in many ways.”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“Is a robust market for block space so that the miners are compensated to pay for it. What's happened now empirically in the past two years is there's a robust market for block space on Ethereum and people are paying to be included in transactions quite a bit there. On Bitcoin less so, part of that is because it is sort of a store of value narrative now, less so than a medium of exchange. It's not like it doesn't really have robust decentralized finance protocols in it yet. So what I think would have to change there in order for that market to develop appropriately is like this type of stuff you see on Ethereum where you can like borrow, lend, even trade. Uniswap deck style, like Bitcoin needs to figure out In many ways to incorporate that into its on chain.”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, no, you guys are getting really into these and the questions here, which I actually love because it's funny, like when you talk about long-term Bitcoin security and kind of the concerns that might be there, like a lot of people that are involved in the Bitcoin space will really just shun you and kind of dismiss it. So maybe I'll get some hate for this response. But I will say that you bring up a good point, which is like, yes, Bitcoin does have a finality to it, where effectively the subsidy that's issued, the blocks have two sort of ways of paying miners for securing the network. One is the block subsidy and the other is transaction fees. So the block subsidy is the one that's declining in half every four years and eventually is going to asymptotically approach zero where it's basically nothing. And Bitcoin is proof of work where miners have to spend energy and real sort of power.”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“Time. And I think the fact that Bitcoin is like the sort of underlying base layer denomination of everything will probably stick around for a bit. But I do think don't be surprised if it changes and changes faster than we think, right?”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“I think the market is transcending in many ways a lot of the ties to its past that it had before. Even for getting Bitcoin for a second, but like tying assets to personalities, everyone's like, oh, I think Tracy mentioned this on previous podcasts. Like, oh, it's like decentralized. It's like the market's so out there and democratic, but a single tweet from a CEO could move it. But as that happens more and more, it could dilute the impact of that. And then the market sort of transcends that. you know, mapping that analogy to liquidations and collateral on Bitcoin, like as all this stuff moves down quite a bit and Bitcoin has to be used as a collateral last resort, like over time, I think more and more exchanges and even Genesis will start using and liquidity will improve in other alts where we can use it more as collateral and then maybe Bitcoin doesn't have to be that sort of de facto collateral piece that's used in the market sort of transcends that nature. It's just going to take time.”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“Genesis or even on like the exchanges where a sell-off in Bitcoin will always kind of impact other markets because kind of the collateral need for it to be acquired, as well as kind of like alts are usually haircut as collateral even for us, like the LTV that we'd lend. Against Bitcoin is very different than the LTV we'd lend against alt and where we'd issue a margin call is different. So like if the alts were to sell off, you know, like it's going to be more likely that those have to kind of move into Bitcoin to support margin and things like that. That being said, I think we're going back to the fact that narratives can change very quickly and the flippan and ETH and whatnot.”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“That's an interesting question because I think crypto market, it evolves and evolves at a pace that's pretty fast, sort of astounding in many ways in terms of the narratives and kind of what people are doing and talking about or thinking about. You're almost on from one thing to the next. Like, you know, two weeks ago, everyone hated Elon Musk. Now everyone loves Elon Musk. Like, who knows what's happening? There's the shift in narrative there. But speaking specifically about Bitcoin and its position in the market relative to others, I think for now, Bitcoin, it does have the most common sort of collateral use case all over the place, whether that's”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“We're always thinking ahead rather than like, you know, we're not reacting. We're kind of like setting up for the future.”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“And kind of how the market is positioned from a demand perspective and supply perspective in terms of Bitcoin, Ethereum, and cash and then all the other alts, of course. But those are really the three main ones. And really, you can call it crypto and cash, where we can position ourselves in a defensive way if we think that market experience sell off and Bitcoin is going to be much more valuable relative to cash and kind of skew our inventory that way. And then when markets bottom out and curves are flat and things are kind of looking like they can go the other way, we'll position the reserves and inventory accordingly where we're floating large balances, but also thinking ahead. So like going into March of last year, we were well positioned for that because we were really talking about it on the dust before. We're like, look, I feel like it makes a lot of sense to hold a lot of Bitcoin here. We're probably going to have some sort of move that we might need it. And even last week, like, you know, we're positioned very defensively on the reserve front in that nature. And yeah, you know.”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“Significantly, like, how fast can you get me the P&L from the futures leg to close up this margin gap? Like, where is it? Is it on CME? Is it on some of the more faster settlement exchanges? And we kind of have that conversation and we work with our clients to understand their risk and bring the assets back into line with where they should be on collateral levels. So that's kind of the main thing. And then really just like in terms of managing our book, I think we've done a really good job of understanding liquidity and duration and creating like a very good internal platform, which we spent a lot of time in 2018 and 2019 developing to help us have very good visibility into curve risk and things like that. So a very good picture of kind of how assets are going to move in and out of the firm. And then also, lastly on this point, I'll bring up kind of like reserves and balances. Like banks have to obviously keep reserves on their balance sheet for outflows and things like that. We're really good at kind of thinking about the interest.”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“Can just post Bitcoin as collateral, borrow cash, go do whatever with it. But then if the price sells off, there's no human interaction there and we're just going to liquidate that collateral across thousands and thousands of customer accounts right now as at a $9 billion or it's probably $10 billion now active loan book outstanding we have I would say less than 150 active borrowers which is not that many considering the size and also like the the top ones, the top trading firms are our core clients that we've known for years, but also we understand the nature of the risk they're taking, the nature of the markets they're participating and the and the trades that they're involved in so when an event like March of 2020 happens and Bitcoin goes from like 8k to 5k like rather than liquidating a bunch of retail accounts across thousands and thousands of clients like what we're doing is like hey like we understand that the bitcoin or the ethereum collateral you've posted with us has fallen in value”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, to start regarding the AML and KYC, we actually, Genesis is the New York entity, the broker dealer, is kind of the point of access for all the onboarding. So where SEC and Finra regulated and our onboarding is the same that you'd see for onboarding to any broker dealer, which in short means that it's a long process and very thorough than we do kind of warn clients before they onboard like, look, set aside 30 minutes to fill out the app and then also expect some questions from compliance if anything isn't perfectly right. So the onboarding is, I would say, as robust as any bank out there. In terms of the other part of the risk, which is the counterparty and credit risk, and this is kind of, I think, what makes Genesis a pretty unique player in the space because of the client base we've chose to have at this point. There's definitely a lot of variety of players out there in the crypto market. What we do is we kind of are facing not that many borrowers, really. We're not like a type of shop where any sort of retail client.”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“Of access for similar in the brokerage model, like the CME model, the ETF model needs to have that sort of via thing to really close the spread. That is true in the sense that we would need that to see the trade be much more in line with the traditional cash financing rate in the market. I think the closest thing, honestly, you could see to that, you know, not financial advice or anything, but like if hypothetically GBTC was used as collateral, which is now actually at a discounted nav, that's something where long GBTC short futures is like a trade where you get the discount to nav and then also the collapse of the curve as well. So there's like if your prime broker even were to take that and maybe some out there do, I'm not actually quite sure, but those are kind of the things you'd have to see for it to be more of a point of access from those sort of brokerage accounts into the marketplace.”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, no, just onboard and yeah, shoot me a message and I'll get you all set up very, very simple and straightforward. But no, in all seriousness Genesis is one, but also more exchanges are getting involved in that too. I think what Josh Younger brings up is really like a liquid.”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, one example of this, and it's very relevant, is really Genesis started our derivating desk in May of 2020. We've seen explosive volumes there. I think that's actually kind of why I'm on this podcast anyways. Joe, I shared you that report on Q1, which had a huge options and forward sort of trading section. Genesis is one of those venues where you can post spot Bitcoin against short futures position. You could face this bilaterally over the counter, or we can cross you on CME or a different exchange of your choice. But we'll do that for you because we think it's good collateral. We know that your short future is long spot. It's a place that it makes sense to us. And we're happy to go”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“Want to do where it's going to be much more tied into the nature of the way humans are trading and the emotional aspect of and the psychological aspect of markets more so than like, let's say, the stock market and the commodities markets out there. And on top of that, there's no sort of lender of last resort or similar in crypto where liquidations can happen and markets can go really, really south and no one's really has to come in and step in and be like a designated market maker or similar like you know on the CME there are designated market makers and a lot of these products out there which are forced to be on the bid if markets sell off a certain amount. You don't have that in crypto. So the democratic nature of the market, the fact that it's a new asset class, I think it's going to cause these opportunities to almost persist a lot longer than we think. So maybe in some very, very future hyper efficient state like crypto has just used this colloquially as cash or Venmo or stablecoins.”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“No, I agree with you. Broadly speaking, yes, the market's going to get more efficient over time and the amount of very blown out or high yield arbitrage opportunities and similar kind of are smaller. At the same time, though, I do think the tailwind of the fact that a new asset class is born here, which is pretty rare for anyone to see in their lifetimes. You don't really get a new asset class, right? Like it's like, okay, you have assets and they kind of exist like stocks, real estate, gold. But like, you know, now there's a new asset class. It's called crypto. Whether people like it or not, like it's here to stay. It's like Pandora's box is open. Like, you know, you can't just put this back and end it. So it's going to be around in some form or the other. And given the difference between the crypto market and the traditional market, which I think the key difference really is access, like there's really low barriers to entry for someone and individuals to kind of come in and trade and do leverage or whatever they want.”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, no, I think I get what you're saying, which is like a lot of people, a lot of market participants are here for the inefficiencies of the market. And once the market becomes super efficient, it's like, okay, on to the next thing, what's next?”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“All traders. And part of the reason why potentially these markets blow out so wide because you don't really want to be in a position where you buy spot sell future, but then the underlying 10x's or 5x's from there. It's a very tough position to be. And like last summer, for example, Ethereum was probably trading around $300, $400 in September and December futures were trading and even the March futures were trading at a pretty good annualized basis yield where you would be very comfortable to buy spots sell future but then Ethereum teleports to $1400 all of a sudden you're scrambling for margin on your futures leg and you know it gets a little hairier so it's not it's not totally cut and dry and as riskless as it might seem on the surface”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“It could indicate that look like there's some sort of washout coming up next because things are just a little out of control right now and it's way too profitable to just buy spot sell future where like I kind of just have to do it. And the unwinding of that trade, you know, kind of going back to talking about, oh, why is the sell-off happening? I forgot to mention this then, but I'll mention it now because it came up. When you unwind this trade, the action you have to perform in the market is buying future and but more importantly, selling spot at the same time. So when markets sell off the basis traders that are involved in the market are going to have to sell spot and buy future, adding to the spot pressure that you see on the order book. So that is definitely a huge portion of the offer you see right after a liquidation sell-off. So, you know, I would say those are kind of the things to consider there. But also the margin on the future's leg is a concern generally for”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“the futures are much more in line with spot because after the whole sell-off, all of a sudden people think that the market's not going to go up as much and they don't really have a desire to own the curve as much. So the spreads and the sort of yields have compressed there in terms of the difference between the two. But the underlying market is so volatile in crypto, like the spot market where the interest rate market, which is basically the basis market, is equally as volatile. So these annualized rates swing all over the place. Like in 2018, they were pretty much negative the whole way through, really since 1920, they've been positive. And then you have these really, really wild moves where the rates are super positive because they're so bit up. And then they kind of usually come down. And I would say it's actually, in many ways, it's a leading indicator as to where kind of spot can move next because, and traders talk about this all the time. It's like as these rates kind of get bit up and these curves are”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, I mean, on the interest side, there's definitely a lot of more eyes on it right now than I would say there ever have been. It's a lot more popular. It's talked about a lot more. In a nutshell, I think you described it pretty well, but derivatives traded a premium to spot, primarily because people want leverage and people bid up those interest rates similar to kind of how I was talking about what the market cap should be worth in the eyes of traders relative to what it is versus the amount of cash that's been lent to those traders. So all those parameters slide around. And I think in February and May and March and April, you had a pretty wide gap between where the market cap was trading and versus where people thought it was going to go. But that is an emotional difference, I think. And it ebbs and flows over time. So if that gap narrows, which it actually has right now as we're talking right now on this date.”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“So they definitely do. They definitely do. Oh, they do. They use futures. They use options. I think really after March of last year with that sell-off, I think a lot of them were even more inclined to do so, which is kind of why you saw us rally from the lows of like, let's say, 4K on Bitcoin to 10K in June on pretty much a pancake forward curve. The June futures were barely above or the September futures were barely above spot throughout that whole move up, which is historically very different from than what you've seen in the crypto market where like if the market swings bullish and like 2x's you know usually you see a bid up in premiums but the futures were really tight relative to spot so the prevailing theory is there is that like you know there must have been a tight offer on futures who is selling those futures you know i think a lot of that or people that have you know sort of forward receivables in crypto and want to be able to hedge that and and so you know that's why you saw a little bit of pressure there so there's definitely a sophisticated you know participation”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“I think you kind of nailed it with why people do it. It's just because people want a reason and minors are conveniently, you know.”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“I think you actually nailed it there. And I'll speak broadly on this because I'm by no means a mining expert or anything like that. But I think from a psychological perspective and a trading perspective and markets perspective, where markets sell off drastically and suddenly, all of a sudden there's like a feeling that who is responsible for this? Where do I point the finger? Like someone has to, there's something that can bear the blame here. I think miners just kind of given their maybe like elusive nature and activity are easy to point to. But in reality, like it's not really, you know, it's not really the cause of the electricity concerns and the CapEx concerns or the outages in Shenzhen. Those things relative to the actual flows in the market, I think are pretty small and don't matter as much. But people like to paint narratives and find a way to be watch this happening.”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“It's less likely that the whole cash obligation woe was like a reason for this most recent sell-off, mostly because the break-evens for miners in terms of the prices they need these assets to be at to sustain their electricity costs and operational costs are significantly lower than where Spot was. It was more of a relevant concern, I would say, in the March of 2020 crash where we saw a move past like 4K and kind of into the 5K range on Bitcoin because at those levels, you're getting really close to the sort of cost of mining and like, you know, it gets a little hairier down there in terms of miners staying profitable if prices were to sustain in the lows there at like, you know, over 30K, miners are doing fine in terms of operational expenses relative to revenue. So I don't think a sudden urge for like, you know, oh, you know, we have to pay our bills, cause the sell off.”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so our sister company is actually DCG Foundry, which is, it is effectively a mining and staking company. It also has like a core mission to help bring hash rate to North America and also do it in a more conscious, renewable way. But the mining thing, and I've talked to Mike Pollier there a bunch, who's kind of runs that business and is very, very in tune with the mining ecosystem. And we have clients that are that are miners as well. I think”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“for dealing with crypto, but then also going further down the rabbit hole into areas where a lot of people might not be looking. So yeah.”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“What I just said there was like, you know, at the start and at the beginning. And that eventually dies down. So it's not really something for the passive yield-seeking investor to kind of just be like, oh, I'll just park this here for a bit. And you can do that in many ways on-chain. But the sort of the crazy yields that you're talking about, you wouldn't quite see if you were just so passive. It takes a little bit of understanding as well as nimbleness and willingness to be able to move around. And also like the fact that Ethereum has like two pretty large side chains now. One is called Matic. It rebranded to Polygon and the other is Phantom where you're basically, if you're willing to go change up the change you're looking at, you can be compensated in a way because a lot of people aren't just going to go do that. So like less people are looking at it. And then you get into other sort of layer ones like Solana and things like that. You know, you're compensated effectively.”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“Getting out yields kind of delta risk and impermanent loss and thinking about all the ways that you can actually extract the yield, but also walk away in notional dollar terms in a decent sense without having to take sort of large losses there. I would say the main reason why those yields exist is really protocols are formed which have a native token. That token contributes to governance or has some sort of value tied to the protocol either through like a burn mechanism or some sort of fee generation mechanism. Basically it's somewhat valuable if the protocol is valuable and then to incentivize people to use the protocol, especially at the start of the protocol's launch, the protocol will emit sort of that token to people that contribute to providing liquidity on the protocol. And that causes you to have good yield opportunities in crypto, but a lot of”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“The sort of traders in the market want it to be worth $4 trillion, but only $500 billion is being lent to the market as spot sort of cash leverage to use. The remaining difference is sort of bid up in interest rates, and that causes derivatives and futures to kind of go bid relative to spot. And then that's reflected in interest rates. And then, of course, you get good yields on cash coming into the other side of that trade and trying to help close it, which it's not completely free money in any sense, but it's very simple to understand why you could earn yield on your cash in that way. And it makes sense from an end-to-end non-circular crypto perspective. The crypto circular perspective is, I think, what you're getting at is more on the yield farming side of things, which that aspect of the market is game theory, psychology, in terms of kind of getting in.”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, no, I've been watching to kind of the recent podcast and it's such a question that comes up so often. The Aaron one was great, by the way. I think there's two sort of aspects of that yield that comes from the stablecoin. One is the one that makes more sense and the one that's easier to understand is really just the basis trade, which is, of course, And leverage traders want to be long, they bid up the market in futures. There was a good tweet actually by Sam Bankman Fried, who was on this podcast that kind of described why that exists. And in a nutshell, it's basically.”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I mean, it's like the billion-dollar age old question, right? It's like, I think it's just at the end of the day, you kind of just have to look at the activity on exchanges and the sort of the trading that occurred. There was large spot selling on certain exchanges. So someone out there with a lot of inventory basically, and maybe it's not someone, I don't think it's definitely one person or anything like that. It's just like there was just a lot of exiting from the market in spot. So we don't know who that was because it's not really the flow that we see, but it definitely existed.”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it's so funny. I mean, I was working on Sunday and kind of on chat with the desk and the amount of times I said like, who is selling was kind of crazy because the only thing we're seeing on dips like that are net buyers. And granted, our flow is very skewed and biased towards the buy side because of kind of the nature of the clients we're dealing with. But we were seeing institutions come in buying the dip, like large hedge funds, trading firms, as well as ultra high net worth individuals. really every single piece of flow that we saw in like the sub 2k ETH range and sub 35k bitcoin range was just net buyers so like we were supporting the bid in many ways there and the question was really like why the heck is this you know kind of selling off so hard so you know we we've just seen a lot of net buyers there”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I mean, it depends on the size of the art, but in a sense, like sort of, because people can still pay really high gas fees and jam themselves into the pool and get top priority for miners. It's just a matter of if the opportunity you're looking at is worth that. So like a lot of the smaller things aren't really worth that. So they just kind of hang for a bit.”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“And I think there was a little bit of clogging of the Ethereum mempool where gas fees went super high. And oh, I forgot to mention this earlier. That causes it so that it's basically really hard to move assets on Ethereum. And there is a lot of collateralized lending going on on Ethereum. Like, you know, people are posting ERC-20 tokens or ETH as collateral to borrow like stablecoins from protocols. When a sell-off like that happens and spot moves so significantly, all those sort of on-chain deposits are very difficult to top up both from a collateral perspective or returning the loan perspective. So you get this cascade of on-chain liquidations where the prices of things on decentralized exchanges might be vastly different than the price on centralized exchanges. And it's really just a product of difficulty actually coming in to support the bid. And then it all sorts of normalizes. And then it kind of builds. But yeah, the pace of that is difficult.”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“Settlement times, specifically for Genesis, I mean, we were pretty good about them. We got through all of them totally fine. I think on the exchange side, there were some delays here and there, like kind of T plus one, which is really just an eternity in crypto, which normally in traditional finance, it's like T plus three, and it's like, wow, arrives on time.”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“Kind of put in higher fees and wait for transactions to go through. So all those sorts of elements make our nuances more prevalent. So you do see a little bit of widening there. And then there's also like limits on how much you can withdraw from certain places and liquidity constraints in terms of how much size can be actually thrown at this, where like people that have really big balance sheets and really big arm trading capabilities might not be looking at a specific small ARB because it's not worth their time just notionally what they can make. So for all those reasons, I think you're going to see these spread sort of persist for a while. And it's a good opportunity, I would say, for like more like nimble, smaller size firms to really take advantage of them.”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“Don't get me wrong here. I think there's definitely a lot of algo trading going on in crypto, especially on the Red Exchange side. Really since 2018, when March or kind of January to February of 2018, when those spreads were really wild, the very smart R trading firms out there definitely started looking at the space and got involved in a big way. I just think the way the market is structured leads to some ways that it's more difficult to be an art shop in crypto. You have to manage a lot more nuance than say an exchange or ETF ARB shop. One example is really just the blockchain itself. There's a mempool, there's different chains. It could be clogged with transactions. Things could be slower on chain. So it's like physically more difficult to get assets from point A to point B. Even service providers like Genesis, we settle trades as fast as we possibly can. But when the network is clogged, there's really not much that we can do other than.”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“Especially in the spot market. So those kind of flows were competing against each other a bit regarding weekends and volatility on the weekends. I think a huge part of that is really the market is still very human driven. It's not like everything is extremely algorithmic and high frequency trading and super quantitative at the end of the day. This is more of a speculative marketplace where there's leverage, of course, but also a lot of humans just kind of clicking, buying and selling. And on the weekend, of course, yeah, you know, no wires is definitely a part of it, but also like the larger liquidity providers might just be a little bit more wide on the screens. So, you know, you'll kind of have like easy way to like, like there's just like a high chance that like a small amount of capital could wipe through a lot of levels of the book. So you kind of get those sort of drawn out moves. So I think it's really just the human element of it and the fact.”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“There is definitely a pace to the market depending on the hours, depending on the day of the week. I think there's a couple reasons for that. One is a sort of Western market and an Asian market. They have different, sometimes they're very in line in doing the same thing. Other times they have different risk-taking proclivities and preferences. And they could sometimes be fighting each other in a sense. So you could see different price action in the Asia session versus the US session just because the user base is positioned differently and then moving in a different sense. Like, you know, last summer, for example, in May or really after the March crash, a lot of the miners and a lot of the sort of very long Asian firms had a little bit of concern after the way March moved that they were more inclined to hedge. So a lot of the sell pressure came out of Asia, whereas the US side of things had more of a bid.”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“I think people like to speculate and say, like, oh, you know, this market sold off. There's X, Y, and Z might have been in a tough spot. But when you really dig into it, it's like exchanges are fine. They're just facilitating trades, trading firms had a great week, even if they're long on their down on their core long positions. And yeah, service providers like Genesis, as long as we're managing our risk and knowing our clients' positions and knowing what our clients are up to and their risk well, we're doing fine as well. Overall, I think it's the price is probably the scariest part, the actual underlying behind it is not so bad.”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“As long as you're not levered on top of your spot holdings, it's not really that bad for you. The only way it really, I would say firms are in a tough spot is if they're holding just spot, they have no cash. And then on top of that, they've taken leverage out against that. You know, in this market, I think the participants that do that sort of style trading are, it's just almost like a ticking time bomb, right? It's like they're not going to stay around for that long because you don't really need that much leverage to capture this market and even spot itself is volatile enough where you don't really need to like go crazy with futures or swaps.”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“Primarily because they're long spot, short futures, or short swaps. And when a move like that happens, those spreads really collapse. And not only do they come back to parity, they sometimes go the other way. So like they go into negative territory. So you get even more juice out of the trade. So a lot of our clients actually did really well that week kind of being positioned appropriately for that trade and for that move. If you're like a crypto hedge fund that's like aggregating assets and kind of just sitting net long, it was probably not so fun for you, but you're not, you know.”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it's an interesting question because it really depends on the entity and the sort of firm, the type of firm you're talking about. If you're talking about trading firms and ARB shops, like kind of our core client base, it was probably one of their better weeks on their direction neutral books of all time.”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“Defaulted Genesis. On our side, we manage our risk really well. All of our clients topped up or returned loans or we didn't have any liquidations or defaults. And the market kind of just carries on. And now the people left are another layer of survivors onto the next sort of market cycle. So it happens from time to time. It's hard to point to exactly what it is, but overall market moves on and we're in a healthier response now, I'd say.”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source
“When that happens, the liquidations can get pretty wild on alt and they kind of cascade. And the difference, I think, with what happened last week was usually when that happens once and gets to a certain point, it kind of bottoms out in floors. What was different last week is it kind of just felt like it kept going and the pressure for the spot selling just sort of continued. That's what made it particularly worse, I would say, relative to, let's say, March of last year, which was kind of a one-day thing. kind of we rallied and there was also some solace in knowing that other markets were behaving the same way. The fact that this was sort of idiosyncratic to crypto makes it even a little bit more painful. But at the end of the day, I think what the takeaway is from it is more impactful than like the actual sell-off itself, which is, look, you know, there was no lender of last resort that had to step in. We saw 40% drawdown. There's no, you know, injection of capital into the market.”
2021-05-31 · Odd Lots · Roshun Patel on What Really Happened During the Crypto Market Crash · IDENTIFIED FROM THE TRANSCRIPT · source