A Simple ALTxBTC Price Index and Application of HMA Strategy to Detect General Trend for All Alts Market

This part of Crypto Market Strategies Series is about detecting trend reversals of Alts Market as a whole. So far, general retail investor behavior consists of reading news about individual coins, speculating on the effects of news when entering an alt position (like forks, mainnets, cooperations/allegiances), plus comparing current prices with past prices and trying to buy the dip in the hopes of a possible future parabolic price.

But how can we really determine if a price for an alt coin is really the dip? What if the price keeps going down? Where is the bottom?

It is very hard to determine for individual coins and due to their pump & dump nature, most TA will not give consistent results.

To overcome this problem, I concentrated on creating a simple ALTxBTC Price Index, to be able to see the Alts Market as a whole. It works like a usual Stock Exchange Index, when the index is falling, although some individual alts may be holding and even some may be still rising, it means most of them are in a downtrend and expect most if not all, to dump. On the other hand, if the Index is rising, expect most if not all, to rise.

Most important side effect of this Price Index is, although HMA Strategy does not work well with individual alts, it yields consistent results with the Index.

Above, you can see what ALTxBTC Price Index looks like. It is calculated by averaging 10 major alts’ BTC prices and displays their change over time. Although the Index amount does not correspond to anything, you can compare different indexes to calculate the amount of rise or fall. For example an Index of 45 means the market is down 10% since the index was at 50…

The index also displays ETH Price in Orange, average of the 9 other major alts as White. So you can also compare the performance of other 9 alts to performance of ETH.

The BLUE & PINK lines are again HMA50 & HMA80, signalling short term trend reversals, just like the strategy used for BTC, with consistent results: https://medium.com/@ismailtarim977/a-simple-btc-swing-strategy-using-hull-moving-averages-f68d8012ef14

You can find the TradingView script used to create the ALTxBTC Price Index, if you search for “State of Alts Basket” in indicators.

I will continue to fine tune and update the script, but so far, it is pretty useful to determine when to get into alts and when to exit.

Happy Trading…