With the No. 1 Christmas dinner table chat due to be all about Bitcoin and Cryptocurrencies, Darren Winters takes a look at how Blockchain is triggering algorithmic stock buying.
Human traders have been replaced by quants (trading programs-algorithms) the reality is that algorithms have taken control of Wall Street. Computer-aided high-frequency trading now accounts for about 70 percent of total trade volume. Moreover, it is how the big players make money in microseconds.
The retail community is also increasingly using trading programs as they share and post information on the internet on how to create quants using Python tools from scratch.
Darren Winters takes a slow-motion look at how codewords, such as blockchain is triggering algorithmic stock buying.
So company X releases a statement containing the word blockchain. The quants (bot traders) pick up the word blockchain which then triggers automated buying in the stock. As high-frequency bot traders pour speculative money (hot money) into company X the company’s stock price rises.
The price movements affect the options which move the implied volatility up.
The increased implied volatility triggers other algorithms (with a higher threshold than the first algorithm) so they buy/sell X increasing the price movement.
Now mix into the cocktail all that speculative money sloshing around the financial system (courtesy of the central bank’s monetary easing policy) and what do we have?
Blockchain is triggering algorithmic stock buying on steroids. Other codewords are most likely having a similar impact on trading volumes.
But what is blockchain-which triggers algorithmic buying in stocks?
Blockchain is an opensource, distributed digital ledger that records transactions between two parties efficiently and in a verifiable and permanent way. The ledger itself can also be programmed to trigger transactions.
So it is a digital ledger with AI and cognitive mining.
Blockchain, most likely a deep state-engineered technology, (internal link to my central banker’s new foreign reserves) facilitates cryptocurrencies.
Blockchain technology has a wide application in the digital age and it is probably why blockchain is triggering algorithmic stock buying. The application of blockchain technology in the monetary system, cryptocurrencies are already known.
Blockchain facilitates the transparency of transactions, each bitcoin contains a serial number (similar to cash notes) which is visible to everyone on the blockchain, thereby making counterfeiting more difficult.
Cytocurrenciesis most likely the Fed new extension strategy to increase the product life cycle of its fiat dollar. A recent piece in the Wall Street Journal entitled, Bitcoin is Big. But fedcoin is bigger supports the above view.
Perhaps we are witnessing this much talked about reset but don’t hold your breath waiting for the USD to disappear. The transition ofUSD backed by gold, then petrodollars in the 70s did not stop the USD being the world’s favorite (stable) currency for international trade.
So if the Fed were to include Fedcoins in their portfolio of reserves why would you expect USD to suddenly disappear? I see the contrary. There’ll be no need for a gold audit, nor will the US Treasury Munchkin be called on to visit Fort Knox (the first Secretary to visit since John Snyder in 1948) to tweet “glad the gold is safe.”
Blockchain technology will facilitate complete transparency of Fedcoins (the new digital gold).
But blockchain technology is also likely to have a wider impact on business and society.
From education, healthcare, insurance, and the supply chain can all use blockchain technology. So when a company releases a press report, or the CEO makes a statement with the codeword, blockchain is triggering algorithmic stock buying.
Could front-loading the codewords (the algos) be the next game for human traders?