Markets have somewhat eased a little bit and volatility is decreasing. It is quite difficult to know what will happen in the short term between the horrible economic situation which should drag down equities. The initial reaction from all asset classes in March was to follow down. Even gold and US treasuries were hard hit between 9th March and 16th March. Regarding cryptocurrencies, they had a similar fate.
So in the hardest moment, correlation reappears when we would need most decorrelation. But once the Apex of the crisis is behind us, fundamentals will take over. The bullish case for crypto is stronger than ever with central banks printing banknotes like never before.
Since 18 September 2018, we have been pushing trading signals for the ETH/BTC/USD AR strategy. However, we reckon that some people might just want to buy the bullish case but in a slightly more active way than with a simple HODL strategy.
Also, some of you do not have access to leverage trading and thus cannot short. Platforms such as Coinbase, Bitstamp or Bitpanda are very secured but not very flexible from a trading standpoint. So we have adapted this historical strategy to remove the component that was leading to short position and the result is quite interesting to chase bullish markets even if they are “short-lived”.
As you will see below, the strategy benefits from multi weeks/months up trends while “protecting” you during downturns. Of course, this is not a formal protection, but the financial behaviour has historically been the same. With the ability to switch between BTC and ETH, we make sure that the strategy is always exposed to the strongest currency in bull runs that tend to lift all the boats but not at the same speed.
With this strategy, you will increase the number of trades vs our simple BTC.USD LO and ETH.USD LO strategies, which will go from a yearly turnover of 15/20x to 60/70x due to rebalancing between ETH and BTC. However, this increase in trading has a very positive effect on performance thanks to relative decorrelation between ETH and BTC.
As always, we are dedicated to bringing new strategies to our community when we think we can add value. Strategies that have worked in the past might stop functioning in the future, but these slow trading Long Only strategies have made wonders for lazy traders since the launch of our platform in April 2018.
Stephane Ifrah, CEO NapoleonX project