Conviction trading

Back in May 2022 the bottom fell (again) off of the crypto market. TerraUSD collapsed and Bitcoin, which had managed to maintain a range between 35K and 39K fell precipitously to around 30K, a level it had almost forgotten since early 2021.

The fiat price of Hive naturally reflected that, as most crypto prices usually do. Hive went in short order from about $1 to half that.

There and back again

I had some HBD in savings at the (juicy) rate of 20%. I believe that rate is only a "gateway drug" to the Hive ecosystem and it's not sustainable for too long. The reasons it still works fine though are several:

• HBD has better, more resilient algorithms than TerraUSD (the 3,5 days conversion time, the 5% fee on conversion, the low debt cap)
• Hive offers a more diversified economic ecosystem with not only self-referential financial activities but also with content creation and games, which create an independent demand for the Hive token, outside the mere appeal of the interest-bearing HBD savings account.
• HBD volumes are tiny compared to the size of the above-mentioned Hive ecosystem

However, I am of the opinion that in the long run the HBD savings rate should come down toward 8-12% (which is still nice and more sustainable).

I therefore decided to remove my HBD from savings and perform what one might call a "conviction trade". Indeed, I thought there was no justification for the price of Hive to be halved almost overnight. I believed Hive's price will come back close to $1 soon enough to compensate the forgone interest.

With the HBD mobilized I used the internal market, which incurs no fees, to buy HIVE on May 19th and May 20th

Well, I do not follow the prices closely but today I opened ecency and read a post by @gadrian about HIVE pumping and how that was making him feel uneasy. I admit I have no idea either why HIVE is pumping currently and I would be happy to know what's behind and how sustainable this price jump is.

But I also thought it's as good a moment as any to act on my conviction trade and turn a profit on the May trades. I therefore used whatever liquid HIVE I had available and went back to the internal market and acquired HBD in order to have some "dry powder" available whenever HIVE dips again.

Conclusion

I generally tend to think that trading is a fool's errand and to trade as little as possible. But I am an opinionated person and never hesitate to put my money where my mouth is. I believe at $0.5 HIVE is undervalued. In a bear market, $1 is a decent floor price.