Digital Assets & Valuations: How to Understand Price Movements and De-risk Your Investments
(for the individual investors, financial and asset management industries)
When cryptocurrency as an asset class emerged into the market, people needed help understanding how to value it. Crypto prices moved up and down sporadically across exchanges. The speculative nature of this asset class has left many skeptics away from participation. The high risk has been steadily understood over time. Many institutions and regulatory bodies are creating ways to manage and contain risky situations and bad actor behavior. However, the volatile and speculative nature of the market remains. For any investor looking to profit within this new asset class, the right set of tools and, even more so, the correct interpretation of the signals will separate the winners from losers.
Seamless Investing in Digital Assets
At Alpha Trend, we like to break the market into two categories — 1) crypto natives, and 2) traditional financial market participants looking to diversify their asset classes with digital assets. For the crypto natives, transacting and investing in the crypto space has been a no-brainer for years, where new technologies and terminologies have developed to understand this blockchain-driven world. However, most individuals and institutions are not web3 native, and traditional financial market investors are lagging partially due to the fragmented nature of the participation and the inherent risks and lack of tooling built for their understanding of the markets.
With over 40+ years of combined experience in the traditional financial markets, Alpha Trend developed a solution that risk scores each digital asset — from over 80+ cryptocurrencies to 10,000+ NFT collections — based on a similar understanding structure of the traditional financial world. The assets are scored on a scale of 0–100, based on favorability for investment (otherwise understood as the likelihood of price increase or decrease). Assets are classified as favorable (score 60–100), cautionary (score 40–60), or risky (score 0–30) based on a combination of fundamental, technical and social signals. Any digital asset gets an assessment of a positive, negative, or neutral signal, and each signal is a part of the favorability scoring model. Seasoned investors can dive deeper into each signal to observe what trends drive the signal assessment.
A quick snapshot of our crypto platform shows top-scoring cryptocurrencies traded within 24 hours (and similarly their favorability scores):
A similar summary is done for the NFT market of Ethereum-based collections:
We like to break signals into three different categories:
- Fundamental Signals — ranging from financial to quantitative metrics, such as market caps, volumes and tokenomics, hash rates or whale participation, and even the strength of the team, roadmap, and community.
- Technical Signals — often derived from the on-chain data and observed similarly to the ones in the TradFi world, metrics such as pricing momentum, Moving average convergence divergence (MACD), Relative Strength Index (RSI), Bitcoin price Simple Moving average (SMA).
- Social Signals — Social volumes and overall sentiment are derived from Reddit, Twitter, Stocktwits, and other notable platforms.
Are you a traditional financial institution looking to get better at the risk management of digital assets? Or a crypto hedge fund operating with technical data for profits? Below is a representation of how a smart portfolio manager can optimize portfolio construction based on our high-scoring crypto picking tool.
Alpha Trend scoring model can help individuals and institutions de-risk approach to digital asset investing and help increase investing conviction in the assets under portfolio. But don’t believe just our word; come see it for yourself: https://alphatrend.ai/
