Note, I actually don't know if it would always be a profitable action when one starts the conversion at a price above $1.05 or what happens when the price only briefly goes above this threshold and for example stays 99% of the time at $1 or under it for the remaining conversion time window (if you know let me know :)
OK, I know.
TLDR: It is still profitable even if the price spike over $1.05 is brief. Unless you expect HIVE to crash.
I suppose you trust me so you can skip the rest and upvote now.
First of all, HBD does not have a dollar price.
As the most convenient way of profitting from the HBD pump is to buy HIVE on internal market with HBD, we can pretend that you can divide any HIVEUSD quote (such as HIVEUSDT from Binance) with HIVEHBD from internal market to get HBD "price". Whenever this text says "HBD price", you should see the quotes around the P-word in your mind.
Secondly, conversion is not the profitable action.
When Binance says HIVEUSDT is 0.5 and you buy HIVEHBD at 0.4, that is the profitable action. As the HBD price is $1.2 (=0.5/0.4) and we "know" HBD is going back to $1 sooner or later, we make 20% on the trade.
We are now stuck with HIVE and noone is releasing their HBD cheap for us. Noone but the blockchain. So we are going to pay the 5% fee on conversion to stay in the action. Or maybe we pass. Let's think it through.
You have some liquid HIVE in your hands and wondering if conversion leaves you with more HIVE in 3.5 days than now. Let's do a few WLOG assumptions:
If you click convert, you are going to instantly sell the HBD you get for the current price (so you end up with 0 HBD and some liquid HIVE again).
You are down to 0 HBD and there is no reasonably priced HBD available to you (otherwise you sell w/e HBD you have/can get for HIVE before converting).
For practical reasons, I also artifically presume that locking up some HIVE as collateral has zero opportunity cost. Therefore the value of your position after conversion is whatever HIVE you get on the spot (by selling the HBD you instantly get) plus whatever HIVE is going to be released in 3.5 days. Feel free to adjust if you have other things to do with your liquid HIVE).
Note that the full round (conversion and sale of HBD) takes little time and you end up in the pretty similar spot (just with fewer liquid HIVE) so unless something big happens in that short timeframe you are going to convert again (as long as the original conversion was evaluated as good) until the amount of liquid HIVE is insignificant.
The value of your position after conversion is whatever HIVE you get on the spot by selling the HBD you instantly get plus whatever HIVE is going to be released in 3.5 days.
Yes, I repeated the sentence so that it was easier to see that HBD price in 3.5 days does not matter. The HBD price in 5 minutes probably does not matter either. The only HBD price that matters is the one you get while selling the converted HBD. Wheteher you go for market ask price or try to fish for a better one (that risks getting a worse one if the market moves) is up to you.
HIVE price matters. If the median hourly HIVE price in the next 3.5 days could be guaranteed to be the same as current price, converting would be the sure winner anywhere above $1.05 HBD price.
Let's start the math. If HIVE is currently priced at $0.5, your 400 HIVE converted gives you at best 95 HBD on the spot. That is because 400 HIVE is worth 200 HBD, and you are entitled to get half upfront, minus 5%. Fineprint: this is based on minimum price in the last 3.5 days so you only get 95 HBD if the price was above $0.5 all the time. You get fewer if any hour in that timeslot reported a lower price.
IF the HBD price is $1.25, it means internal market trades at 0.4 so you exchange your hot potateos HBD for 237.5 HIVE. If you get at least 162.5 HIVE back from your collateral, congrats, you are a winner.
If HIVE stays at $0.5, you pay 200 HIVE (getting 0.475 HBD per HIVE) and other 200 HIVE is released (37.5 HIVE profit). It can also tank to $0.4 and you now have to pay 250 HIVE (getting only 0.38 HBD per HIVE) which puts you 12.5 HIVE in the hole (as your collateral only releases 150 HIVE). Unsurprisingly, you break even at the official price of $0.42 (=0.4*1.05) getting the same 0.4 HBD per HIVE rate you did 3.5 days ago on the internal market.
Now it is time to split the audience. If you look for sure bets only, avoid converting and stay at home. The HBD price could be $1.5 right now but if HIVE price drops like crazy, you can still lose.
If you are fine with taking calculated risks, you basically convert whenever you expect to get better rate in the conversion (calculated from HIVEUSD and subject to 5% fee) than what the internal HIVEHBD currently offers.
In other words, look at HIVEHBD rate, add 5% and if you expect the new rate to be a good deal in HIVEUSD terms during bigger part of the next 3.5 days, go ahead. (If the wording seems vague, well, blame the median thing.)
In pump situations, you can expect the HIVEUSD to significantly grow during the early phase as people start converting after all liquid HBD disappears, plateau during late phase and significantly drop when the dust settles.
Converting at HIVEUSD plateau and just above $1.05 HBD price is an obvious loser.
You can reasonably expect post-pump HIVEUSD trade higher than the pre-pump level so converting at the start is an obvious winner (although it is still best not to lock your HIVE too soon before HBD price reaches its max - in case you are clairvoyant).
Everything in between is your judgement call. But once you have an educated guess about future HIVEUSD pricing, the 1.05*HIVEHBD trick is fundamentally solid and pretty much all you need to balance out the "I need to convert" (HBD is too high) with "I am scared to convert" (HIVE is too high).
