Bitcoin Falls To $60000 As Crypto Slumps To Start October:
The media are acting surprised that Bitcoin fell on what was supposed to be a historically strong month, October. I was not surprised. I predicted this would happen last week, when I showed a chart showing how Bitcoin would break lower, likely eventually to $50k and below. Sure enough, it crashed from $65k to $60k on no apparent news, allowing me to profit greatly over the past four days. Plus, tech stocks went up, so I profited there too.
Hence, shorting Bitcoin not only works as a hedge, but allowed me to realize a substantial windfall just owing to the tendency of Bitcoin to crash randomly. The expected value of a net-short bitcoin position is positive, owing to my timing rules.
It’s little wonder major hedge funds like Citadel and Renaissance make so much money when even the simplest of methods work so well for so long; now scale that up by a factor of 1000 and hire hundreds of the smartest people in the world to find new methods.
Also, methods can last longer than people assume or assuming market efficiency. Markets are huge. Not everyone can possibly be trading everything at once. Stuff will go unnoticed for a long time. Almost 2 years later, it’s amazing how consistently profitable this method is in spite of the EMH and the tendency of methods to stop working over time.
It also shows the power of IQ to be able to find these methods. Thousands of people follow and trade stocks and Bitcoin; it is a coincidence of the smartest individuals found the perfect hedging strategy? IQ is the greatest predictor of individual wealth and other metrics of lifetime success.
Warning: the rest is inside baseball; math ahead.
But even finance is not enough to assess the highest of IQ. Hence, the math challenges, as math has effectively no IQ ceiling. This entailed having to find new results that add to the existing literature, which is a key criteria of fruitful research. The objective was to produce new results that were of the median quality of stuff published on arXiv , starting from only undergrad and high school level math and having to self-learn the rest.
There was one particular paper in which I tried to generalize the author’s result and got stuck, so I had to basically rederive the whole thing with a new proof my my own, which resolved the impasse. The hardest problem I investigated required having to compress an identity in \(Q(\sqrt{2})\) with three terms into a single one related to Rogers L Function, which was necessary to solving a larger problem.
Going from three to two terms was trivial, but going from two to a single one took 3 months of trial and error. At some point I saw I was getting close and then it came together. Based on the extensive literature review I had done, which meant reading every paper I could find about the subject, this had not been done. So that qualifies as having completed that part of the math challenge.
As part of the challenge, I found 2 new identities related to pseudo-elliptic integrals, which are a type of elliptic integral that evaluates to elementary functions (e.g. \(\sqrt{1-27/4(x(1-x)^2)}\). There is also a 4th-degree analogue \(\sqrt{1-256/27(x(1-x)^3)}\) that admits a similar implication as the cubic, using an approach I devised.