I am paid in USDC and have 1.5 years salary on hand because I'm dumb and procrastinated putting it into sensible investments after the last thing it was in dried up. Today, seeing the USDC depeg and realizing that if it evaporates my future payroll also disappears and I'm turbofucked, I opened a $100k long at 7x leverage. If/when I sell the rest of my USDC for something else*, I'll take a 3%+ haircut, which will be offset by the $20k profit if USDC returns to $1 and I sold for no reason. But if USDC falls below $0.85 I lose $100k. I think it's likelier than not that USDC returns to peg on Monday. But it's possible that the irrational market goes really low, wiping me out, and then comes back Monday. So here goes. Gonna be shitting myself all weekend.
Liquidation: $0.8555
Break-even: $0.9694
Profit at $1: $19,609
Truly atrocious timing on the open, I woke up when it was at 94c but as soon as I had finished testing this out with a small position Circle made an announcement that temporarily pushed the price up to 97c and generated so much volume that KuCoin shut down USDC inflows. Every time there's an unusual market event somebody seems to hit the "no buys" button. I should have spaced it out over a couple hours though.
*problem being of course there's really no safe asset to flee into - all the stablecoins are garbage and the offramps I have access to are slow because I mostly used Coinbase
edit: i set up a thing to call my phone if it hits my $0.87 stop loss so I can sleep. i'll post update Monday or whenever i'm out of the trenches. fuck wallstreetbets i need you idiots to keep fighting with me so I don't think about the nauseating amount of capital technically under my control
I am paid in USDC and have 1.5 years salary on hand[...] I opened a $100k long at 7x leverage.
you're in /c/finance, comes w the territory
Wait so your ENTIRE annual salary of 60k is ALL paid in USDC? Like the job pays 60k and ALL of it is in USDC?
I have another 70k not in the long, I make $10k a month before taxes (which are high and complicated because I'm a contractor and all these crypto transactions are taxable events). Yep, all paid in USDC. Egg on my face for not diversifying.
Seems extremely ill advised, if it falls you lose all if it wins, you win small. Hedging is limiting your losses, not doubling down on the same bet. Isn’t better choice to convert 90 percent to irl money, and then bet the same? You lose 3k now, might win 2k later with your bet
also :stalin-gun-1::stalin-gun-2:
If it falls I lose "only" 70k plus whatever USDC holdings I failed to sell, I have a stop loss right before liquidation price. Selling the 100k USDC "long" I started the day with would instantly lose me $3-6k and it would take me days to withdraw to a bank account through KuCoin or similar KYC exchange.
Instant loss of 5 percent is cheaper than 7 percent chance of losing 70k (do you estimate usdc failure chance as less?), according to nerd logic.
This is such a godawful trade purely from a risk reward perspective. You're implicitly saying you have a 3% chance of being wrong since your max profit is par and your entry is 97. Even famously successful traders have track records of a less than 50% success rate, which is why any novice trading book would tell you to aim for at least 3:1 risk reward (meaning your stop loss should be at 96, not 86) and you've completely inverted that ratio and then leveraged it by 7. Even if through some miracle your trade worked all you'd be doing is reinforcing all your worst impulses which virtually guarantees you'll keep making this mistake until you inevitably get zero'd. That's before we even dig into the details.
So USDC is attested to by an auditing firm and they release monthly reserve reports which according to their latest numbers show they have 20% of their reserves held in cash at these banks:
Bank of New York Mellon, Citizens Trust Bank, Customers Bank, New York Community Bank, a division of Flagstar Bank, N.A., Signature Bank, Silicon Valley Bank and Silvergate Bank.
SVB just went into receivership by the FDIC and Circle admits they had almost a third of their cash there, Silvergate just went into liquidation, and 2 of them have large unrealized losses on securities similar to SVB ( NYCB and Customers ). EDIT: Signature bank just collapsed too, although it doesn't really matter since the fed is backstopping them, still thought it was funny.
There's a chance SVB depositors are made whole even without some kind of direct intervention but the time scale on which this occurs is uncertain as is the the amount that'll be returned. This was an incredibly stupid trade purely from a risk reward perspective because even if things worked out in the long run there's a real risk you get stopped out purely by market gyrations. At the very least you should have just let your money sit unlevered because a 20% potential return isn't worth a possible total loss.
meaning your stop loss should be at 96, not 86
this doesn't make sense to me - USDC went to 96 again overnight. I set the stop loss at a value where I think it's not going to get triggered by random market fluctuations before Monday's news.
Please note that I'm starting out with USDC holdings (and so risking a possible total loss anyway; I think if there is a crash to 0 it'll be fast and I probably won't have time to get my money out). This is one of those bad investor psychology loss-aversion trades.
In terms of risk reward, since your upside is only 3 points you should only have 1 point of downside. The reasoning for where your stop loss is makes sense but your entry doesn't from a risk reward perspective, meaning you shouldn't make the trade unless you got in at around 89 (3 down, 11 up). I don't know enough about the exchange itself or how withdrawals work, if you're assuming Monday morning they're going to get slammed in a bank run and it'll go to 0 immediately which my intuition wouldn't assume (if tether is still standing despite its obvious indiscretions). If I were in your shoes I would've gotten out at a 3% haircut and just take the tax write off rather than risk it all-or-nothing since this seems like a large enough sum that you're letting yourself get emotionally involved.
Looks like you're in the green on this, so congrats. I'd still take this as a time to reflect on your reasoning since I'm not sure how much thought you put into this trade that you didn't disclose in your post.
appreciate it. I thought it was most likely that USDC would return to 1 today but wanted downside protection in the way of early sale without net loss in most likely scenario. Ran it by my finance friends. Last night's Yellen announcement was silly but whatever, not gonna look a gift horse in the mouth.
You should liquidate now & spend the money forming a Maoish militia/cult in the Appalachian mountains. That's the real long play
Okay, but why would you accept payment in a stable coin? I can understand taking it in BTC or some other actually crypto-currency (the risk is high, but the reward is also high). Taking it in like tether is just high risk, no reward?
In short, get the hell out. You might win 20% or you might lose everything. Like, go big or go home. Put that shit on something wild like cardano or some other top 10 if you wanna go nuts like that. Shoot for the moon if you're gonna shoot for anything. Don' just shoot for the lower branches of a maple, when missing will leave you paralyzed
I've had a lot of shit to do recently and just haven't bothered investing it properly after returns dried up on the last thing I had. Don't want crypto price risk which is how I've avoided losing my shirt so far. Before recent bear market I was moving it around to various things earning 10-15% APR. Payment in USDC is not a big deal because it is normally quick and costless to convert to real dollars, it's keeping it in USDC that became an issue.
Cryptp is stupid, you should feel bad for trying to do anything but meme with it, and immediately sell and stop doing anything with crypto, ever.
Leave stablecoins as soon as u hit break even and put it in some bonds or smthn
- when you want to do crypto stuff and minimize your crypto price exposure. as this weekend has shown it doesn't reduce your crypto systemic risk.
- gamble, but better than no stop loss and for sure I get liquidated
no, you should only buy drugs with Monero or other privacy coins. and all the markets are down rn, or at least they were when I checked a few weeks ago
finance stuff that was outlawed with real money a hundred years ago
Did your position get liquidated? Looks like lots of stop losses got triggered since your post
not yet. my stop loss is at 87c, lowest it went overnight is 94 I think
Depends what exchange you're trading on. Coindesk shows it going in the high 80s. Just be safe man
Outlook good, Yellen said they're gonna save the SVB depositors lol
