CryptoPainter
CryptoPainter
An old friend calls me a "painter", technical/data analysis and quantitative trading, providing various tricky angles to see the market, and using time to leverage. The real account is an agent account, a self-evolving strategy system is being tested, please do not copy!
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BTC spot premium has sharply declined over the past week, with selling pressure mainly coming from USD spot supply, 80% of which is from institutions and ETFs on Coinbase...
So it's not that you want to move funds to US stocks, but everyone, including some institutional holders, is getting a bit restless...
This feels very much like early 2020, when BTC also had a rebound, but it was nowhere near as strong as the US stocks hitting new highs every day...
Under standardized trading strategies, the difference between going long and going short is actually minimal. Taking BTC as an example, if your maximum loss per trade is capped at 1%, then all trading strategies built on this basis should have a completely balanced risk-reward ratio for both long and short positions.
However, in an extreme scenario where stop-loss is not considered and you hold a short position in BTC indefinitely after opening it, the long-term expected profit from shorting will gradually decrease over time, eventually dropping to -1…
In this case, shorting is doomed to fail…
Therefore, it’s not that shorting is impossible, but it’s best to treat shorting as a temporary hedge under a long-term bullish background.
皓樂芒
Why is short selling harder to succeed than going long?
From a mathematical probability perspective,
Assume the price follows a geometric Brownian motion over time t:
dS = μSdt + σSdz.
Expected return for going long: E[ln(S_T/S_0)] = (μ - ½σ²)T.
The return for short selling can be seen as the negative return of going long: E[ln(S_0/S_T)] = -(μ - ½σ²)T.
The key lies in the impact of σ (volatility): the variance for going long = σ²T, the variance for short selling is the same, but any price surge can cause unlimited losses.
Going long can realize profits immediately after a slight price drop (small negative returns are closed out), whereas short selling faces exponentially increasing losses once the price rises, making the probability of failure higher than the corresponding long position.
Ultimately, even though the expected returns theoretically are similar, short selling is at a disadvantage due to variance and extreme losses, making it probabilistically harder to succeed.
From the perspective of volatility and leverage:
Short selling often requires a higher margin ratio because any price increase can lead to unlimited losses.
Using standard deviation σ to represent volatility, the maximum loss for going long = σ * √T; the maximum loss for short selling = ∞, but with a threshold γ set, the actual loss = γ * σ * √T. γ>1 means short selling faces greater potential losses.
From trading costs and slippage:
Short selling must first sell short then buy back, involving discounts, financing fees, and slippage. If C is the trading cost rate, the cost for going long = C, for short selling = 2C (one sell short, one buy back). This introduces an additional loss term in the balance equation, resulting in lower net returns for short selling.
From formulas to parameters, short selling is disadvantaged in maximum potential loss, trading costs, and correlations. Simply put, mathematically, it requires a higher probability threshold and lower cost barriers to achieve the same success rate as going long.
Do you all agree?
It's really fascinating to watch these randomly generated strategies continuously evolve towards increasing returns and reducing drawdowns…
But the problem is, after running for several days, not a single long-term surviving strategy has appeared, which might just prove one fact:
That focusing on trading on the 1-minute chart ultimately leads to death, with no exceptions…
Once this round of natural evolution ends today, we should be able to move up to higher timeframes and officially prepare for long-term evolution!
CryptoPainter
After running for 10 hours, which is 10 generations, strategies that slightly profit have started to appear, but since their lifespan is only 2 generations, they are still considered noise...
However, the entire framework is basically up and running. Now I can clearly see how the whole strategy population undergoes natural selection and mutation, and I can even trace their ancestors and genes...
Ideally, the final system will produce 1 to 2 strategies that can survive long-term, and I will share their factors. In the pessimistic scenario, after 24 generations, if the dominant species are still new species that have only survived a few generations, then it’s declared a failure...
Simply put, this system uses current market data to simulate an ecosystem where strategies continuously mutate, those that adapt survive, and those that don’t are eliminated...
Just like the history of Earth’s biosphere, many species existed only briefly in geological time and then became fossils. What I want to do is simple: through long-term natural evolution and elimination, select strategies similar to cockroaches...
In other words, species that are indestructible and can adapt to all kinds of market changes.
It sounds quite ideal, but reality is still harsh. The probability of success iterating 100 strategies is almost zero, so the next development task is to find a way to scale the entire system. A battle royale of 10,000 strategies is much faster than 100.
Look...
This is what professionalism looks like...
If BTC drops to 30,000, then the BTC price won't go above 40,000.
If BTC rises to 80,000, then the BTC price won't fall below 70,000...
Since Trump took office, Cook has completely changed...
He used to be considered the most objective hawk, but his statements have become increasingly strange...
CryptoPainter
A strong El Niño phenomenon may bring a new term: climate inflation…
If food and energy prices all rise as a result, combined with the instability of crude oil prices, it is entirely possible that we will see the Federal Reserve raise interest rates within the year…
At least recently, the performance of U.S. Treasury yields has been on a completely different narrative from the U.S. stock market.
Historically, either the stock market or the bond market must be wrong…
Why does crypto feel so despairing now?
During the geek era when BTC was priced between $0.1 and $1, people believed BTC would be accepted;
In the early stage of $1 to $10, people were fascinated by the fact that BTC could buy pizza;
At the $10 to $100 stage, people began to believe BTC would change the traditional financial order;
From $100 to $1,000, people believed more would have to buy BTC to fight inflation;
Between $1,000 and $10,000, people started expecting traditional capital and institutions to buy large amounts of BTC;
From $10,000 to $100,000, people anticipated spot ETFs, national reserves, and large institutions holding BTC;
After $100,000, people suddenly realized there seemed to be nothing left to look forward to? Those who could take over already have, and those who won’t never will. What now?
Is this the source of the despair?
Because BTC has gone through these stages and finally become the other side of gold: a high-risk value storage asset...
Fake exchanges usually suspend withdrawals as part of a double-layered scam…
If there are a large number of people buying U outside the exchange, then those buyers are most likely the exchange itself. Users have 1 million stored there, but outside the exchange it’s exchanged for 500,000, effectively emptying 50% of users' assets…
If no one outside is buying the exchange’s U, then the chance of the exchange running away greatly increases…
The exchange plays this trick, then resumes operations, using the excuse of cooperating with regulators to cover it up…
But the unfortunate part is that users, out of fear, end up giving their assets (claims) away at a discount to the exchange for no reason…
Back in 2022, small exchanges often used this tactic before their funding chains broke. The worst part was, once people realized that buying large amounts of internal exchange funds was a way to make money, the exchange would suspend withdrawals again a year later.
But this time, the exchange no longer buys U outside; instead, it splits internal assets into thousands of parts, pretending to be retail investors selling at 50% or even 30% off outside…
Speculators see an opportunity and frantically buy U outside, thinking they’re making a big profit, but this time the exchange really runs away!
They exchanged real on-chain assets outside for a string of numbers inside the exchange’s database…
In short, no matter how this scam is played, the exchange can always fleece people. Which side you fall on depends on whether there’s more money wanting to get out or more money wanting to get in.
Printed and ready, Gary the snake!
Such a complex structure is surprisingly sturdy, and the little snake feels incredibly smooth to hold…
CryptoPainter
The most complex structure printed so far…
I really admire current 3D printing technology, which can control precision below 0.1mm while executing at speeds that are indistinguishable to the naked eye.
It would be great if metal printing could be civilianized like this too, I can't even imagine it…
I bought a few rolls of carbon fiber, and I'll try to print some parts later 🤣
Multiple agents working together are indeed very efficient!
But the problem is...
The human brain is very poor at handling concurrent tasks. AI hasn't hallucinated, but I started hallucinating first...
Once VibeCoding sessions exceed 4 hours, I lose even the patience to finish reading the replies...
What’s missing now is a clear-headed Hextech...