1/21
So ETH OI has been overall down recently, but on FTX it's at all time highs (1.2M ETH) and in this low liquidity environment ETH has seemingly split with the macros and tried to defend aggressively around that 1200-1300 range.
That bid is often led on FTX.
So ETH OI has been overall down recently, but on FTX it's at all time highs (1.2M ETH) and in this low liquidity environment ETH has seemingly split with the macros and tried to defend aggressively around that 1200-1300 range.
That bid is often led on FTX.
2/21
So the rational conclusion is that someone institutional is very leveraged in a large position on FTX.
I'd guess some sort of staked ETH hedge.
Right now, with liquidity so low it's pretty cheap for them to defend the position.
So the rational conclusion is that someone institutional is very leveraged in a large position on FTX.
I'd guess some sort of staked ETH hedge.
Right now, with liquidity so low it's pretty cheap for them to defend the position.
3/21
Let's imagine this position is only 300k of that ETH (the well above average amount), then that means its a roughly $400M position.
Each day there are multiple ticks where purchases of $20k spot can turn a red pip green.
Let's imagine this position is only 300k of that ETH (the well above average amount), then that means its a roughly $400M position.
Each day there are multiple ticks where purchases of $20k spot can turn a red pip green.
4/21
We know a lot of bots look for chart patterns (or rather their underlying math) and so a $20k buy can break that pattern keeping momentum in a favorable direction.
We also know a lot of bulk sellers of spot are tapped out.
We know a lot of bots look for chart patterns (or rather their underlying math) and so a $20k buy can break that pattern keeping momentum in a favorable direction.
We also know a lot of bulk sellers of spot are tapped out.
5/21
We're sitting at points where a lot of large holders are ideological or still profitable and so need a much higher pain environment to sell.
So we only move large on either forced selling or large news changes that bots respond to.
We're sitting at points where a lot of large holders are ideological or still profitable and so need a much higher pain environment to sell.
So we only move large on either forced selling or large news changes that bots respond to.
6/21
So, making those small spot buys in low liquidity moments to shift the chart, and selling either spot or contract against it when liquidity is higher is (compared to the position size) incredibly cheap and efficient.
So, making those small spot buys in low liquidity moments to shift the chart, and selling either spot or contract against it when liquidity is higher is (compared to the position size) incredibly cheap and efficient.
7/21
At first, my hunch was that the large FTX position was an institutional player who bought spot during the June lows, and hedged during the rally.
But, that seems increasingly unlikely.
At first, my hunch was that the large FTX position was an institutional player who bought spot during the June lows, and hedged during the rally.
But, that seems increasingly unlikely.
8/21
As while OI fell across the board, the ETH OI on FTX rose as a proportion of all open interest being the largest cumulative, despite the fact that Binance normally out ranks them by a factor of 2x-4x.
As while OI fell across the board, the ETH OI on FTX rose as a proportion of all open interest being the largest cumulative, despite the fact that Binance normally out ranks them by a factor of 2x-4x.
9/21
That position hasn't closed out further as we've retreated lower, and there is no other indication to suggest there is any other position near that scale that would be worth defending this price range at so aggressively.
That position hasn't closed out further as we've retreated lower, and there is no other indication to suggest there is any other position near that scale that would be worth defending this price range at so aggressively.
10/21
While Bitcoin whipsawed a lot more, ETH really tried to hold this range.
All this suggests that the position must be a long and not a short.
While Bitcoin whipsawed a lot more, ETH really tried to hold this range.
All this suggests that the position must be a long and not a short.
11/21
Normally we make the mistake of shrugging these big positions off, assuming that they must be hedged.
But we painfully learned just a few months that 'sophisticated operators' are a lot more risk on and less hedged than we think.
Normally we make the mistake of shrugging these big positions off, assuming that they must be hedged.
But we painfully learned just a few months that 'sophisticated operators' are a lot more risk on and less hedged than we think.
12/21
If we look at when the OI has moved, the former averages FTX had relative to the market and the current OI, it's entirely possible that this position is anywhere from 250k ETH ($330M) - 700k ETH ($925M)
If we look at when the OI has moved, the former averages FTX had relative to the market and the current OI, it's entirely possible that this position is anywhere from 250k ETH ($330M) - 700k ETH ($925M)
13/21
Normally, I wouldn't attribute it to one position as a lot of sophisticated operators could be interested in hedging a staked ETH position.
But the fact that other exchanges and options have massively slumped in open interest, it suggests there is 1-3 big positions here.
Normally, I wouldn't attribute it to one position as a lot of sophisticated operators could be interested in hedging a staked ETH position.
But the fact that other exchanges and options have massively slumped in open interest, it suggests there is 1-3 big positions here.
14/21
We know the position is safe down as far as around $1217 where we wicked to in September, but below that it's unclear.
Part of it depends on who the operator is, and if they have other liquidity to post or not.
We know the position is safe down as far as around $1217 where we wicked to in September, but below that it's unclear.
Part of it depends on who the operator is, and if they have other liquidity to post or not.
15/21
It also could be a non-liquidating positions (we don't know if FTX offers though, but lots of exchanges will offer that to large MM as we saw in the 3AC meltdown)
Those positions don't liquidate on wicks but do get aggressive margin calls that they need to post.
It also could be a non-liquidating positions (we don't know if FTX offers though, but lots of exchanges will offer that to large MM as we saw in the 3AC meltdown)
Those positions don't liquidate on wicks but do get aggressive margin calls that they need to post.
16/21
But, given the aggressive price defense we've seen, my guess is that we've got either stops or liquidation prices for this position starting under the $1200 mark, and that while the person has liquidity to buy/post, it's obviously not enough to move that line back much.
But, given the aggressive price defense we've seen, my guess is that we've got either stops or liquidation prices for this position starting under the $1200 mark, and that while the person has liquidity to buy/post, it's obviously not enough to move that line back much.
17/21
My guess, is that a large market maker is off side, or hedging against something that can't easily be used as collateral or have other capital tied up. (Already used as collateral, private equity, staked eth, etc)
My guess, is that a large market maker is off side, or hedging against something that can't easily be used as collateral or have other capital tied up. (Already used as collateral, private equity, staked eth, etc)
18/21
This is the position I'm going to be watching like a hawk, because they are heavily betting on macro market recovery before hitting their exit point, but if this position begins to break we could quickly revisit the June lows.
This is the position I'm going to be watching like a hawk, because they are heavily betting on macro market recovery before hitting their exit point, but if this position begins to break we could quickly revisit the June lows.
19/21
And depending on any risk of leverage or contagion in an already bruised market, if another large player does blow up, we could slip even lower.
I expect we'll see whale games around these levels as people try to test this position.
And depending on any risk of leverage or contagion in an already bruised market, if another large player does blow up, we could slip even lower.
I expect we'll see whale games around these levels as people try to test this position.
20/21
Interestingly enough though, it doesn't seem the most aggressive liquidation hunters have went after that position yet, which may narrow the field of who it is or how its positioned as well.
Interestingly enough though, it doesn't seem the most aggressive liquidation hunters have went after that position yet, which may narrow the field of who it is or how its positioned as well.
21/21
It's also entirely possible that this is tons of positions from a user demographic that somehow overwhelmingly prefers FTX to all other markets, but it seems pretty unlikely at this point.
It's also entirely possible that this is tons of positions from a user demographic that somehow overwhelmingly prefers FTX to all other markets, but it seems pretty unlikely at this point.
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