How realistic are big short-term returns on the crypto market?
I know from looking at the crypto market charts there are many opportunities to make huge returns even in short term. But I was wondering what exactly you might expect.
I made a simple short-term trading analysis of more than 1,000 coins and tokens available for public trading for the past 120 days. I analyzed what you could’ve made with a 1-day, 7-day and 30-day holding, if you chose the right coins.
There truly are new opportunities to make a significant profit every day.
In the two charts above, you can see the number of coins making (1) +1000% returns with a 1-, 7- and 30-day holding, and (2) +100% returns with the same holding pattern by the end of each holding period. I.e. if you held a 30-day position with every coin, this shows how many of the coins would give you (1) exponential or (2) 100%+ returns, going 120 days to the past.
The number of coins making 100% and more returns when held only for 30 days is staggering.
The main issue with backtesting in this case would be separating the high returns coins from the rest. In practice, that would mean finding reliable buy & sell indicators so that on average you buy more of the high-performing coins and less of the low-/under-performing ones.
Basically this means that whatever day you’d start the holding periods you could expect significant short-term returns (if you knew the indicators).
Based on the decreasing commonness of fast & fat returns, the market seems to be cooling down, but I would see this to be a phase rather than a converging trend. Still, there are 100+ coins making returns ranging from 100% to several thousands of percents in just a month.
Much more work could be done on these data. For example, we could remove all the very narrow pumps & dumps and coins with a marginal market cap etc. and try to find some reliable profit signals. I made this simple analysis just to have a glimpse on the recent opportunity space.
By the way, at Coin Venture Club we are crafting complex simulations that enable us to extrapolate predictive properties for short-, middle- and long-term trading from historical data combined with metrics that go beyond the scope of traditional market indicators.
We’ve released a “minimalistic community pre-alpha version” where you can simulate date-triggered buy & sell orders on bitcoin and all the altcoins. You can play with it here: https://coinventure.club
If you are interested in the source data, you can download them here:
- 30-day holding
- 7-day holding
- 1-day holding
Disclaimer: This is not an investment advice. I am only presenting you with a personal view on the data we have.