How did I know Trump would waffle on the reserve when everyone else was certain it would happen, only to be wrong? From my Jan 7th post a month ago, I observed that Trump hadn’t actually spoken or tweeted about the reserve, or about crypto at all. This was a negative development unbeknownst to everyone but me. The thing is, Trump had never formerly endorsed the idea of a Bitcoin reserve. During a 2024 Bitcoin conference, he hinted at the possibility of a stockpile, but never wholly endorsed the reserve.
People were convinced Trump would carry out this promise even though he hadn’t endorsed or even spoken about the reserve in months. This is the opposite of what you would expect if someone is enthusiastic about something. If you have children or recall your own childhood…how do children convey enthusiasm about something? When they cannot stop talking about it, like going to Disneyland. That is the clearest indication.
Of course, this is no assurance it will happen (like promises of building a border wall when he first ran), but if the only information to go on is what Trump says or doesn’t say, his silence or absence of outward enthusiasm about the reserve leading up to the inauguration, necessitates revising those odds downward.
Prediction market fun. Despite the announcement that tariffs won't start on Mexico until March 3, Polymarket puts the odds of tariffs before the end of this month at 100%. Small print said Trump needed to take executive action this month; didn't say he had to follow through pic.twitter.com/RuToQoZhrZ
— John Authers (@johnauthers) February 3, 2025
On the other hand, the tariffs were not a surprise at all, as that was a centerpiece of his campaign and he talked about it a lot, yet prediction markets had dramatically discounted the odds of the tariffs happening, as shown above. People assumed Trump was bluffing and would not follow through. Why wouldn’t he? He did so in 2017. I wish I had bought this contract, but shorting Bitcoin is a good enough proxy for betting on tariffs, which has worked great.
Also, it helps having a lot of experience and a general intuition for how markets and politicians work, due to high IQ. Predicting is not as hard as it sounds. The relevant information is often already out there. You have to just correlate it. In this case, the information was contained in what was left unsaid.
Speaking of IQ, time for another Bonus Math Problem (as an excuse to put this cool WordPress LaTeX plugin to use). Consider the integral:
\(I = \int_0^1 \frac{\sqrt{3} (y^2 + 4)}{y^4 – 5 y^2 + 16} \, dy \)
Chat GPT-4 is unable to correctly solve this, although it tries using partial fraction decomposition. Wolfram Alpha gives the correct approximation but is unable to find the exact answer. If you try to decompose this integral you will get two quadratics, which is really messy and may not actually work. There is a shortcut, which can be easily verified by differentiating:
\(\frac{d}{dy} \left( \tan^{-1} \left( \frac{c y}{g – y^2} \right) \right) = \frac{c (g + y^2)}{c^2 y^2 + g^2 – 2 g y^2 + y^4}, \quad \text{where } g = 4, \quad c = \sqrt{3} \)
Integrating both sides gives the desired result, \(\frac{\pi}{6}\). The fascinating thing about the factorization is the quadratic field of 13. How does one get from 13 to 3? I dunno, it just works.