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Hi Everyone,
For retail customers, most trading platforms have things on a pretty tight automation regimen.
A process known as "internalizing" generally offsets the risk of one client with another client who is on the other end of the trade.
This process famously broke down earlier this year at Robinhood, when an overwhelming number of clients all decided to take the same irrational trade at once. That's when the big brains moved in.
For larger customers, things are also fairly automated, but the white men in suits who run the big banks spend lots of time and energy on the whales.
Those few customers are responsible for an overwhelming majority of the volumes and commissions.
One such whale got famously wrecked near the end of last week in what one financial journalist brilliantly dubbed... |
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The downfall of Bill Hwang, the founder and CEO of Archegos Capital Management, was anything but silent.
Even though Archegos, a family office, was only exposed to a select few stocks, the sudden liquidation of $20 billion worth of shares was like a supernova that impacted prices across all financial markets, even crypto.
It may take a while to unwind the rumors of how this family office was able to use the same collateral to borrow multiple times its holdings from many of the world's largest financial institutions.
The best part of the story by far, however, is how these prominent financial institutions let him get away with it because of the huge commissions he was paying.
Their greed was so great that when the time came to pull the trigger and close out on Archegos, they couldn't do it. Their hesitation caused even further losses and a bigger fallout. |
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The party
Speaking of the big bankers, today we got a headline from Goldman Sachs indicating that its much anticipated digital assets trading desk is now very close to opening.
Unlike the rehashed headlines that we discussed in yesterday's newsletter from Visa and PayPal, this rehashed headline is actually a remnant of the 2017 bull run.
Back then, Goldman Sachs was trying hard to get on the crypto train, but like most of Wall Street, they missed the party. Let's hope that them showing up at this point in the game will be an uplifting event.
The largest and most well-known cryptocurrency has spent most of the day trying to crack the $60,000 resistance.
Ether, the most-used crypto, has had a nice run and is looking at a nice round psychological resistance at $2,000.
Should either of these levels be broken on strong volume, we may yet hear the cork popping off that bottle. |
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That's it for me for this week. Even as I wrote today, I had some family over.
Unfortunately, there will be no BMJ newsletter tomorrow, and I will not be contributing to Friday's edition.
It should be noted that this Friday is not only Good Friday, but it's also jobs day in the U.S. with the release of the nonfarm payrolls report, which will take place with low market volumes, so watch out. See you next week. Have a wonderful evening.
Best regards, |
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Mati Greenspan Analysis, Advisory, Money Management |
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