LINK/ETH Growth Alpha
Further details for Link/ETH Growth Alpha set (LEGA)
The LINK/ETH Growth Alpha set (LEGA) is a new strategy developed by Alphachain Capital specifically for TokenSets. The goal of the strategy is to increase holdings of ETH while providing 100% exposure to cryptocurrency prices at all times.
This set was developed to provide set buyers further choice by adding a pure cryptocurrency pair strategy alongside our ETH Trending Alpha sets.
LINK exhibits higher volatility than ETH and provides a good asset to trade against in search of greater ETH holdings. While still positively correlated, the correlation between the pair is relatively low compared to the larger cap cryptocurrencies.
How does it work?
The LINK/ETH Growth Alpha set is a semi-systematic strategy that combines the use of technical indicators including bollinger bands and RSI to generate a signal when the model considers LINK to be overpriced or underpriced versus ETH. The strategy relies fundamentally on the systematic signals from the model.
The strategy also includes a discretionary element. This allows position sizing to be decided when signals are generated. The allocation will be decided based on the signals generated in addition to assessing key technical levels. Positions are likely to be gradually allocated from one asset to another, however, faster allocations are permitted depending on the signals generated alongside manager discretion. The manager may add to positions as neccessary, providing the fundmental signals from the model are adhered to.
Back Test
Due to the discretionary element of the strategy it is difficult to back test accurately. A basic back test for the strategy can be performed as a guide excluding any manager discretion using only the model signals, assuming a 100% allocation to each asset on each trade. For this reason the back test is unlikely to be an accurate representation of the live performance but intended more to show the models fundamental signals from which the strategy is derived.
Note: In live trading there will be far more trades of smaller position sizes (scaling in and our of positions) with averaged entry and exit prices from the managers discretionary input, rather than 100% entry at a given price as per the back test.
The back test was performed from October 2017 to April 2020:
Key findings from the back test:
- 13,675% gain over ETH for the total back test period. 1 ETH would have resulted in 136 ETH in 2.5 years.
- At least 22 trades. In reality it is likely to be far more than this due to the scaling in and out of positions.
- 31% drawdown in ETH terms
Note that past performance from the back test may not represent future performance accurately. Future performance may deviate from the back test significantly.
Risks
This strategy will be exposed to cryptocurrency prices 100% of the time. This means if cryptocurrency prices fall, the USD value of the set will also fall. There is no hedge against USD value in this set, unlike our ETAS or ETA sets. The goal of the set is to accumulate more ETH regardless of the USD value of ETH.
As mentioned previously the back test is unlikely to be an accurate representation of the live performance but intended more to show the models fundamental signals from which the strategy is derived.
Are you risking any of your own capital?
Yes. Each an every strategy we develop I personally invest my own capital into. I always have ‘skin in the game’ so to speak. I will personally allocate capital to this strategy so that I will share the gains and/or losses with you all. Please see the set to see how much I have allocated to this strategy.
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